SIX Exchange Regulation AG (SIX), the Swiss listing authority, has informed GAM that its Sanctions Commission has upheld the sanctions proposal submitted against GAM Holding AG.
This is related to the accounting treatment of future performance fee payments as a financial liability following GAM's acquisition of Cantab Capital Partners LLP in 2016.
GAM takes its financial reporting responsibility very seriously and held a different point of view in good faith on this technical accounting matter, due in part to external and independent expert advice.
However, GAM has decided to accept the decision made by SIX's Sanctions Commission and will pay the related financial penalty of CHF400,000 and costs of approximately CHF100,000.
As a result of this decision, GAM is required to recognise the financial liability at fair value and to restate any impacted historical comparative amounts in its next consolidated financial statements on 20 February 2020.
GAM currently estimates the fair value of the financial liability to be recognised is approximately CHF35m as at 31 December 2019, which will only crystallise once matching performance fees are received. GAM continues to expect that its full year 2019 underlying profit before tax will be approximately CHF10m.
This accounting matter relates to GAM Holding AG's consolidated financial statements and does not relate to any of GAM's investment funds, nor to any of its clients.