| To : Head of Research | 29th August 1996 |
| For immediate release |
JARDINE FLEMING REGRETS COMPLIANCE WEAKNESSES IN FUND MANAGEMENT
SUBSIDIARIES
The following press release was issued today by Jardine Matheson's
associate, Jardine Fleming Holdings Limited.
| For further information please contact: |
| Jardine Matheson Limited Neil McNamara |
|
| PRESS RELEASE | 29th August 1996 |
Jardine Fleming today expressed regret for regulatory breaches
by two of its subsidiary companies, Jardine Fleming Investment
Management (JFIM) and Jardine Fleming Asset Management (JFAM),
resulting in disciplinary action by the Securities and Futures
Commission (SFC) in Hong Kong and by Investment Management Regulatory
Organisation (IMRO), the UK regulatory body.
The action resulted in a decision by JFIM to make voluntary payments
to three clients, where disadvantage was considered by the SFC
to have occurred, totalling US$19.3 million, (HK$148.96 million),
on a basis agreed by the SFC to be fair and reasonable.
The Company said that the five-month enquiry, involving extensive
investigation by independent accountants and within JFIM, had
followed a report by JFAM to IMRO of certain systems deficiencies
in 1995. JFIM has co-operated fully with the SFC and IMRO in
the investigation, which is now concluded.
Mr Henry Strutt, Managing Director of Jardine Fleming Holdings
Limited, said, "This has been a painful experience for our
Group. We very much regret the regulatory breaches. We are glad
to have been able to put the matter right, and pleased that the
issue is now over."
Jardine Fleming said that the SFC concluded that there were weaknesses
in JFIM's dealing and compliance procedures, and that those weaknesses
created the opportunity for clients to be disadvantaged. Actual
disadvantage was considered to have occurred in three portfolios
managed by a single former fund manager. JFIM has taken steps
to deal with the issues raised. It has undertaken a major review
and revision of its dealing and monitoring procedures and has
increased management and compliance strength.
"JFIM has emerged from the process with increased management
strength and a renewed emphasis on its dealing and compliance
procedures", Mr Strutt said. "We accept the criticisms
of JFIM's procedures made by the SFC and IMRO and have already
acted to make the necessary changes."
Two of the clients affected are publicly-held funds, JF Pacific
Securities Trust, (PST), an authorised unit trust in Hong Kong,
and FFF-Fleming Pacific Fund, a sub-fund of the Fleming Flagship
Fund ("FFF"), which is established in Luxembourg. The
Trustee of the PST and the Board of Directors of FFF have agreed
the method of allocation to investors who are considered to have
been affected. In the case of PST, payments have already been
made to the fund and to the Trustee for distribution among unitholders
who have redeemed their units. Letters to affected investors in
both funds will be despatched shortly. The third client affected
is an overseas institutional client.
The Company said that the payments are being made from JFIM's
own resources and that, after providing for all issues arising
from the SFC and IMRO investigations, Jardine Fleming's profits
for the first half of 1996 are not currently expected to be materially
different from the equivalent period in 1995.
Mr Strutt said, "The regulatory framework and standards of
practice have developed rapidly over the last few years and increased
globalisation creates its own potential problems. This is an
on-going process and Jardine Fleming's management is fully committed
to ensuring that its dealing and compliance procedures remain
in accordance with best international practice as it continues
to develop."
He concluded "We are grateful to our clients for their understanding
and support over the past few months. We have also much appreciated
the good working relationship with both IMRO and SFC.
"We are pleased to have this matter behind us and look forward
to developing our businesses further. In addition to our home
markets, the global opportunities for the Asian based skills of
Jardine Fleming as a whole have never been greater."
| Enquiries: | ||
| Press: | Rodney Williams / Katherine Cheung | (852) 2978 7991/2/3/4 |
| Group Corporate Communications | ||
| Jardine Fleming Holdings Limited | ||
| Hong Kong | ||
| Investors: | Customer Services Line | (852) 2978 7937 |
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