UK-based asset manager Martin Currie has announced staff changes at its Chinese joint venture as the result of a potential conflict of interest over an investment in an unlisted convertible bond issued by printer cartridge business Ugent Holdings.

The potential conflict of interest was discovered in November 2010, and has led to the departure of Chris Ruffle, portfolio manager for China and Taiwan, last Friday (July 29), as agreed with the UK’s Financial Services Authority and communicated to the US Securities and Exchange Commission.

Ruffle joined Martin Currie to set up its China-focused investment capability in 1994, and the firm opened an office in Shanghai in 1997. In 2006, this evolved into a joint-venture arrangement with Ruffle and Shifeng Ke, also a portfolio manager for China and Taiwan at Martin Currie, through their company Heartland Capital Management.

Heartland plans to exercise its option to acquire Martin Currie’s interest in the China joint venture in November, and with it the Shanghai-based research team.

Martin Currie is searching for a new portfolio manager for A-shares, a new portfolio manager for Greater China small-cap and a new regional head of research. None of the hires have been made yet, so it is uncertain when they will come on board, says a spokeswoman for Martin Currie.

Ke has assumed Ruffle’s responsibilities and will work alongside James Chong, investment director for China, and John Pickard, Martin Currie’s head of investment, to transition the management of affected portfolios. 

Ke is being supported by Hong Kong-based investment director Brian Canavan in supervising the work of the Shanghai-based research team. Canavan will work in the Shanghai office to help manage the research process underpinning client portfolios.

As previously announced by Ugent Holdings, Martin Currie’s board initiated reviews into the circumstances surrounding the transaction and into relevant governance arrangements and control systems and processes.