AXA in £150m settlement for software glitch

News

AXA in £150m settlement for software glitch

Angelica Mari

Financial services giant AXA will be forced to pay millions of pounds to clients after it emerged that errors in trading software were hidden by three of its subsidiaries, prompting bad performance in investment portfolios.

According to the Wall Street Journal, the company will have to pay a $25m (£15.5m) fine to the US Securities and Exchange Commission (SEC), on top of the $217m (£134m) to backers who had been told that market volatility and other factors - but not the software failures - were the reason for the losses across their investments.

An error had been found in the system last April, according to the article, but staff covered up the glitches and failed to report it to senior management.

Three AXA companies were involved in the blunder, AXA Rosenberg Group LLC, AXA Rosenberg Investment Management LLC, and Barr Rosenberg Research Center LLC. The error - which was introduced into the quantitative investment model they use to manage client assets in April 2007 - has since been fixed.

"To protect trade secrets, quantitative investment managers often isolate their complex computer models from the firm's compliance and risk management functions and leave oversight to a few sophisticated programmers," Robert Khuzami, director of the SEC's division of enforcement, said in a statement.

"The secretive structure and lack of oversight of quantitative investment models, as this case demonstrates, cannot be used to conceal errors and betray investors."


Email Alerts

Register now to receive ComputerWeekly.com IT-related news, guides and more, delivered to your inbox.
By submitting your personal information, you agree to receive emails regarding relevant products and special offers from TechTarget and its partners. You also agree that your personal information may be transferred and processed in the United States, and that you have read and agree to the Terms of Use and the Privacy Policy.
 

COMMENTS powered by Disqus  //  Commenting policy