July 9 (Bloomberg) -- JPMorgan Asset Management is contacting clients to clarify its investments in Let’s Gowex SA, the Spanish Wi-Fi provider that said it would declare insolvency after falsifying financial accounts.
“Fraud is a risk that is extremely hard to insure against in portfolios and, by its nature, hard to detect,” the asset management unit said in an e-mail to clients, which was seen by Bloomberg News. Three funds run by the company had exposure to Let’s Gowex, according to the e-mail. A JPMorgan press officer wasn’t immediately available to comment.
Let’s Gowex announced on Sunday that it would file for insolvency and that its chief executive officer had resigned. The company’s shares dropped 60 percent last week following a report by Gotham City Research LLC that said Let’s Gowex inflated revenue.
At the end of June, the stock was a 2.1 percent holding in JPMorgan Funds Europe Focus Fund, 2.9 percent in JPMorgan Funds Euroland Focus Fund and 0.31 percent in JPMorgan Funds Europe Strategic Growth Fund. Trading in the stock has been suspended since Thursday. JPMorgan Asset Management said the stock “for the purposes of the portfolios involved, is now subject to consideration by the JPMAM Non Standard Pricing Committee.”
--With assistance from Rodrigo Orihuela in Madrid.