* Assets under management fall after director suspension
* Money manager taking measures to support profit
* CEO Friedman calls suspension 'a clear setback' (Adds details, background)
ZURICH, Oct 23 (Reuters) - Swiss money manager GAM Holding AG's group assets under management fell by 17.7 billion Swiss francs ($17.77 billion) in the third quarter following the suspension of a director that has thrown its business into turmoil.
Assets fell to 146.1 billion francs on Sept. 30 from 163.8 billion on June 30, the company said in a statement on Tuesday. GAM has suspended Tim Haywood after questions arose about whether he failed to conduct sufficient due diligence and make accessible some internal records.
"The consequences of the suspension of an ARBF investment director marked a clear setback for GAM," Chief Executive Alexander Friedman said.
"We are taking immediate and near-term measures to support GAM's profitability," he added. "We have a stable and diversified business that we continue to build upon and we remain fully focused on delivering the investment returns expected by our clients."
GAM said it saw an improving net flow trend in October 2018, so far, with net outflows diminishing.
GAM last month said its compliance head was leaving after a tumultuous period triggered when it suspended Haywood, who was in charge of absolute return bond funds (ARBF). GAM has begun liquidating nine funds whose trading it halted in July after suspending Haywood.
The company said the ARBF strategies contributed 10.8 billion francs to the decrease in assets under management during the third quarter.
The Swiss financial group has said its decision to suspend Haywood was prompted by a tip from an internal whistleblower.
Haywood may have breached the company's signatory policy, may have used his personal email for work purposes, and breached the company's gifts and entertainment policy, GAM has said.
He has not responded to requests for comment.
The announcement triggered an investor exodus and a sharp fall in the company's share price.
The shares have slipped 53.5 percent since the start of the year, though speculation of a takeover this month has prompted a slight recovery.
$1 = 0.9961 Swiss francs Reporting by John Miller; Editing by Michael Shields and Sunil Nair