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GAM's share price nosedived after the Swiss asset manager unexpectedly suspended the star manager of a flagship bond business. The firm warned that his exit may spark withdrawals. 

The Zurich-based asset manager said it suspended Tim Haywood, who until Tuesday was responsible for 11 billion Swiss francs ($11.1 billion) in absolute return bond strategy funds after an internal review.

«The issues relate to some of his risk management procedures and his record keeping in certain instances. The investigation has not raised concerns regarding his honesty», GAM said in a statement. Haywood couldn't immediately be reached for comment.

Bracing for Withdrawals

The stock price of the asset manager dropped about a fifth to 9.22 Swiss francs in early morning trading after the report broke. GAM is also bracing for clients to move: Haywood's absolute return bond business is a hefty earner for GAM: More than half of the assets managed – 6.2 billion francs– are eligible for performance fees. 

«We may also experience client redemptions as a result of today’s separate announcement of the suspension of Tim Haywood, investment director business unit head for the unconstrained and absolute return bond strategy», the firm said in a separate statement on its results.

Bond Fund Veteran

GAM said it didn't identify any «material client detriment» from Haywood, but continues to review. Its regulators are being kept informed of the investigation, GAM said.