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The mystery of GAM's bond fund collapse deepens with reports of traders working the phones shortly before the Swiss asset manager suspended a star portfolio manager.

Zurich-based GAM has shed more than one-fifth of its market capitalization since suspending Tim Haywood, in charge of its 11 billion Swiss franc ($11.1 billion) absolute return bond business.

The matter continues to be shrouded in mystery, due in part to the fact that the Swiss asset manager needs to walk a tightrope: GAM can't blame Haywood before it has the hard facts to do so, but the company will also want to protect itself from legal action by investors down the road.

On Monday, British newspaper «The Times» (behind paywall) reported that GAM traders had attempted to shop around assets from the bond fund, without specifying its source. Another trader said bonds were being offloaded due to a fund's liquidation. A spokeswoman for GAM didn't comment on the report.

Frenzied Efforts

The report came following a frenzy by GAM to try and sooth frayed client nerves: the company blocked withdrawals last week, and said it might end up shutting 7.3 billion francs in absolute return funds previously managed by Haywood. 

Last week, GAM told clients that Haywood hadn't deviated from «a legitimate investment strategy», meaning the fund manager was still trying to make money by buying and selling bonds. With the forensics nearing a close, GAM said it hasn't established that any clients had been harmed.

«We now need to focus on internal disciplinary processes to establish if any further actions are necessary», the company said.