The UK Financial Services Authority (FSA) has banned a London-based hedge fund manager and fined him £140,000 for mismarking funds.

Between August and October 2008 Simon Treacher deliberately altered broker quotes used in the valuation process of assets in emerging markets funds he managed for BlueBay Asset Management.

The deliberately altered quotes led to an uplift in the independent valuation of the funds of approximately $27 million over three months.

The greatest impact was in August 2008, when Treacher's conduct led to the portfolios being overvalued by $11.8 million. However, BlueBay picked up on the altered documents and launched an internal investigation in November 2008.

At the end of November 2008, BlueBay announced it intended to wind down its Emerging Market Total Return Fund and that Treacher had resigned "following a breach of internal valuation policy".

However, it said there was no connection between the breach and the wind-down decision.

BlueBay referred Treacher to the FSA's enforcement division in April 2009. The FSA said during interviews in July and November 2009 Treacher "gave misleading answers in respect of his methodology and the processes by which documents were provided as support of month end prices".

FSA director of enforcement and financial crime Margaret Cole said: "Our actions in banning Simon Treacher and imposing a significant fine will send a powerful message of deterrence to others who might be tempted to behave in this way. His conduct, both in mis-marking the funds and his dealings with us as the regulator, lacked integrity."

The FSA made no criticism of BlueBay in connection with the investigation. BlueBay has repaid investors in affected funds compensation totalling approximately $650,000.

Treacher agreed to settle at an early stage of the FSA's investigation and qualified for a 30% reduction in the financial penalty. Were it not for this discount, the FSA would have sought to impose on him a financial penalty of £200,000.

BlueBay declined to comment on the case.