GAM continues to struggle after the suspension of a star money manager. The Swiss asset manager's problems are seeping beyond the funds managed by that employee. 

GAM had net outflows of 8.5 billion Swiss francs ($8.5 billion) from its investment management business in the third quarter, the company said in a statement Tuesday. Most of those outflows were caused by clients fleeing the fund manager after its reputation was battered by the mishandling of the suspension of fund manager Tim Haywood.

GAM's CEO, former UBS investment chief Alex Friedman, has been struggling to mend the company's reputation since the surprise suspension of a star fund manager in July. Haywood's funds were closed down after a whistle blower highlighted his investments in unlisted securities issued by GFG Alliance, a company controlled by British-Indian billionaire Sanjeev Gupta, as finews.com reported last month.

Challenging Conditions

The outflows, which do not include funds that have been liquidated, were caused by «challenging market conditions and for the industry and the impact from absolute return bond fund-related matters in August and September,» the company said, referring to the so-called unconstrained bond investment strategies.

Haywood's suspension also caused the liquidation of funds containing a total of 7.7 billion francs, further depressing assets managed by GAM. Clients withdrew 5.3 billion francs from funds that were not linked to the suspension. Those withdrawals contributed to a drop to 66.8 billion francs in assets under management, from 84.4 billion at the end of June. 

Including its private labelling offering, the company managed 146.1 billion francs at the end of the third quarter, compared to 163.8 billion francs three months earlier. 

Takeover Target

GAM has been mulling over a slew of options since its problems became public at the end of July. One possible solution could be the sale of the firm to a rival asset manager. Shares surged earlier this month after a report that competitors in France and Italy were considering just that. 

«We continue to review all avenues to optimize shareholder value,» said GAM Chairman Hugh Scott-Barrett in today's statement. 

The company's priority is to improve profitability, it said, promising an update by the time it publishes results for the full year, on February 21.