Financial Conduct Authority (FCA) said that it would impose a GBP7.2 million fine on Aberdeen Asset Managers and Aberdeen Fund Management for failure to carry its duties to protect investor money with third-party banks from September 2008 to August 2011. FCA added that a GBP685 million of total investor money was put at risk.

Aberdeen, who is a specialist in managing emerging markets funds, run some highly regarded hedge funds. One of the funds is Aberdeen Asia Pacific, which is overseen by veteran manager Hugh Young.

Regulations stipulate that upon deposit of a certain percentage of clients' money in a third party bank, money should be documented and returned to the clients in an emergency. Aberdeen erroneously decided that some of the clients' money were not covered by city financial regulations. The hedge fund manager also failed to document investments placed in third party banks, causing confusion as to which of Aberdeen's clients were protected and by how much.

FCA Director of Enforcement and Financial Crime Tracey McDermott said, "Proper handling of client money is essential in ensuring that markets function effectively. Where they fall short of our standards, firms should expect the FCA to step in and take action to avoid a poor outcome for their clients, and ultimately, consumers."

Aberdeen had complied to the investigation done by the FCA and had agreed to settle. The hedge fund manager received a 30% discount resulting from its cooperation with the regulator.