UK - Standard Life has been fined £2.45m (US$4.1m) by the Financial Services Authority for serious failures relating to its Pension Sterling Fund.
The FSA said the penalty, the first major fine of 2010, signals its intentions to crack down on regulatory breaches.
The fund became controversial in January 2009, when Standard Life made a shock 5% decrease in its valuation.
Regulators said the firm misled customers, as the product was originally sold as a ‘safe' cash fund, despite being linked to risky mortgage-backed securities.
The FSA said systems and controls failings were responsible for the production of the misleading marketing material.
Standard Life also failed to perform a prompt and full investigation of its marketing material when concerns were raised.
The FSA acknowledged Standard Life's pro-active attempts to compensate investors, including paying £102.7m into the fund to restore its original unit price values, and its use of a third party to advice on the necessary changes to its systems and controls.
FSA director of enforcement and financial crime Margaret Cole said: "The FSA takes the issue of misleading financial promotions very seriously and the fine announced today demonstrates our commitment to the principle of credible deterrence.
"It is critical that consumers are given an accurate understanding of the nature of investment products and the risks involved. Without this information, consumers are unable to make informed decisions about whether investments are suitable for their individual investment strategy."
The fund was open both group business and private pension holders.
Standard Life said it had learned important lessons from the error.
A spokesman said: "We have learned important lessons from this mistake and have made significant improvements to our marketing literature processes to prevent the same thing happening again.
"When our own internal review identified problems with some of our literature in February last year, we immediately apologised to customers and injected over £100m into the fund to compensate them for their losses from the sudden fall in unit price.
"Since then, we have conducted a full and thorough review of existing literature and put in place a new improved process for new literature. We have worked closely with the FSA throughout and co-operated fully with their investigation."
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