Hypo pays pounds 300,000 into mispriced Jersey cash fund
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.HYPO Foreign & Colonial has been forced to pay nearly pounds 300,000 into a Jersey-based cash fund because its manager allowed it to be mispriced for nearly seven months.
Daniel Sheard, manager of the pounds 5m Jersey-based Reserve Asset Fund, resigned as soon as the under-valuation of the fund was uncovered this month.
In an internal memo, Mr Sheard blamed the mistake that led to the mispricing of the Jersey cash fund on the pressure he was under managing Hypo Foreign & Colonial's much larger Higher Income Plan.
The Higher Income Plan has attracted almost pounds 500m from 70,000 investors. It uses derivatives to pay a high level of income - now 9 per cent. It has been subjected to intense press and regulatory scrutiny because of fears that investors' capital would be used up in an effort to maintain the level of income.
In the memo, Mr Sheard said: 'I was suffering from great pressure of work at the time as a result of my work with the Higher Income Plan and this was another problem with which I could not cope.'
Simon James, Hypo Foreign & Colonial managing director, said that Mr Sheard had invested in a fixed-interest security that was outside the spirit of the rules governing the fund. 'Daniel bought a short-term note in February with a maturity date in October. The note was priced accordingly.
'In fact, the character of that note turned out to be significantly different. It was a hybrid note, which showed the volatility of a 34-year bond.'
He said the value of the fund was hit by the turmoil in the bond market earlier this year, but it continued to be priced at a higher level.
'When Mr Sheard went on holiday the mistake was uncovered, and he was confronted when he came back. He immediately offered to resign.'
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments