Sweden’s $36 Billion AP1 Fund Fires CEO for Trading-Rule Breach

(Bloomberg) -- One of Sweden’s state pension funds fired its chief executive officer after he was caught breaking internal trading rules.

Johan Magnusson was dismissed after running the $36 billion AP1 fund for roughly a decade, the Stockholm-based investor said on Monday. Magnusson, born in 1959, “no longer has the board’s continued confidence,” it said. The fund’s legal counsel, Teresa Isele, will be acting CEO until a replacement is found.

Urban Hansson Brusewitz, the fund’s chairman, said that Magnusson broke internal rules for “holding and trading in financial instruments.”

“I can’t be more specific,” he said by phone. “The internal trading regulations include guidelines on private transactions in relation to the fund’s transactions.”

The sudden departure of the long-standing CEO marks the latest example of high-ranking members of Sweden’s financial community losing their jobs amid questionable circumstances. In March, Birgitte Bonnesen was fired as the CEO of Swedbank AB, after she misled the public about the bank’s involvement in a Baltic money-laundering scandal.

Since taking over in 2008, Magnusson has delivered an annual return of about 7.7% after costs, well above the 4% target. But he has also been dogged by controversy. Newspaper Dagens Industri has reported on a trip to France for the fund’s employees, to a facility where Magnusson owned property. An external audit concluded that Magnusson didn’t profit personally from the trips and that costs were appropriate.

Magnusson couldn’t immediately be reached on Monday via AP1. Hansson Brusewitz declined to say whether the ousted CEO agrees he breached internal rules. “He’s on vacation as of today, the chairman said. “In France, actually.”

The CEO’s exit comes as Sweden’s big state pension funds recently won greater freedom to invest in riskier assets. New rules this year gave the funds more flexibility to buy non-listed assets. At the same time, they now only need to hold 20% of the portfolio in bonds, down from 30%.

--With assistance from Veronica Ek and Niklas Magnusson.

To contact the reporter on this story: Rafaela Lindeberg in Stockholm at rlindeberg@bloomberg.net

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net;Jonas Bergman at jbergman@bloomberg.net

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