The reports said Lyttleton was taken in for questioning, along with the female suspect on 30 April by the City of London Police Economic Crime Directorate, which had executed a search warrant in West London.
Lyttleton joined BlackRock as a graduate trainee and took over the UK Fund in 2001 – he was dropped from this mandate in March 2012 to concentrate on higher alpha strategies.
He started running the BlackRock UK Dynamic Fund in 2003 and then became the poster boy of absolute return, managing the BlackRock UK Absolute Alpha Fund from its launch in 2005 – one of the first funds of its kind – until he left BlackRock at the end of March this year.
His departure in March followed a three-month sabbatical taken in June last year, requested by Lyttleton to resolve family issues. He returned to BlackRock in September 2012, but after six months relinquished his fund management responsibilities and left.
BlackRock UK Absolute Alpha was his flagship fund and during his first three years at the helm Lyttleton put in a sterling performance.
In 2008 Nick Osborne, who had worked with Lyttleton since the launch of the mandate, was named co-manager.
However, performance of the fund faltered from 2010 onwards and given its absolute return mandate was considered a disappointment by investors, so-much-so Lyttleton was compelled to write to holders of the fund to apologise for its poor performance during 2011.
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In the past year the BlackRock UK Absolute Alpha Fund has shed £627m in assets, falling from £1.1bn to £417m. According to FE Analytics it is the fund with largest redemptions over the past year, six months and three months.
BlackRock released a statement confirming an individual who previously worked for the firm was arrested on suspicion of insider dealing.
“The FCA has informed us that the allegations relate to actions carried out for personal gain, while off our premises, and that neither BlackRock, nor any other employee, is under investigation. There is no suggestion that there has been any impact to any of BlackRock’s clients.
“The alleged behavior is totally contrary to the firm’s principles and values. BlackRock strongly supports aggressive enforcement of the law in these matters. The firm has been aiding and will continue to aid the authorities with their investigations,” it concluded.
The FCA said it was unable to comment on individuals within a case.
