The regulator said this morning, the fine was for “failing to put in place adequate controls in the fixed income area of its front office, and for providing inaccurate information to the regulator and for failing to correct the inaccurate representation for four months”.

TAML received a 20 per cent Stage 2 settlement discount, without which the fine would have been £7,548,130.

An FCA statement read: “The FCA considers these failings to be particularly serious because the deficiencies allowed a fund manager to initiate, execute and book a $150 million trade which, had it settled, could have caused a $110 million loss to the relevant client funds.”

The penalty comes after work carried out by the Financial Services Authority in April 2011 when it wrote to TAML.

Officials asked TAML to address specific concerns about the fixed income area of its front office, including the Emerging Markets Debt desk.

The FCA statement read: “The FSA was concerned about, among other things, the number of errors occurring in that area as well as the risks of fund managers initiating, booking and executing their own trades.

“On 29 June 2011, TAML responded to the FSA stating that it had appointed individuals to be responsible for all aspects of dealing on the relevant desks (including the Emerging Markets Debt desk) and that the individuals had taken on those responsibilities. This overstated the position. In fact, the individuals had not taken on all the responsibilities outlined in TAML’s response and consequently, the FSA’s concerns had not been fully addressed.

“Shortly after TAML submitted its response, a fund manager on the Emerging Markets Debt desk initiated, executed and booked a $150 million trade on behalf of TAML funds at four times its market value. The fund manager did not have the authority to make the trade. TAML’s outsourced back office identified the problem and did not settle the trade.”