The UK’s Financial Services Authority has dropped its investigation into hedge fund star Guillaume Rambourg, almost a year after its probe into the trader helped trigger a crisis at his former firm Gartmore.

The City of London financial watchdog has concluded its inquiries and will take “no disciplinary action”, Mr Rambourg said on Tuesday.

The decision caps a 12-month saga that saw huge outflows from Gartmore’s linchpin £5.5bn ($6.2bn) hedge fund business, precipitating the company’s eventual sale.

The process of the investigation has angered former investors in Gartmore, once one of the UK’s biggest fund management firms. “The FSA went about it in a guilty until proved innocent fashion,” said one of Gartmore’s once-largest shareholders. Gartmore’s former management led by chief executive Jeff Meyer also was criticised by an influential UK financial adviser – in particular over the company’s decision to suspend Mr Rambourg that triggered the FSA investigation.

“It all seemed incredibly over the top,” said Mark Dampier at Hargreaves Lansdown. “It could surely have been dealt with by Gartmore internally. It’s a classic example of being so transparent it’s wrecked the entire business.”

The impact of Mr Rambourg’s suspension in March last year was worsened thanks to it coinciding with the FSA’s biggest crackdown yet on insider trading in the City. Fears over what Mr Rambourg might have done led to panic selling of Gartmore shares. It later transpired that Gartmore believed Mr Rambourg had routed trading orders to favoured brokers – a practice that while common among hedge funds, was prohibited by Gartmore’s internal policies.

The company concluded barely a month after his initial suspension that there was “no suggestion of dishonesty or a lack of integrity in Guillaume’s actions”, and that clients had not suffered. At the time, the company defended its actions as proportionate.

The FSA investigation continued, however. Mr Rambourg resigned from Gartmore in July to “co-operate fully” with the regulator’s inquiries.

The FSA and Gartmore declined to comment. Gartmore was acquired by rival asset manager Henderson in a £366m rescue bid in January this year at a 54 per cent discount to its IPO price of 13 months earlier.

Mr Rambourg said: “I look forward to embarking on the next chapter of my career in fund management.”

Additional reporting by Megan Murphy

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