H2O Asset Management is contesting a €93 million penalty issued by French regulator Authorite des Marches Financiers.
The fine, issued on 3 January, comes after the AMF’s enforcement committee said the asset manager and certain individuals were in breach of regulations surrounding the purchase of unlisted securities and were in violation of rules related to buy and sell-back deals.
The investigation, which began in late 2019, centres on seven French-domiciled Ucits funds and investments in products issued by the Lars Windhorst-owned Tennor Holdings.
The AMF said the company would be fined €75 million. Co-founder Bruno Crastes and chief investment officer Vincent Chailley have also been ordered to pay €15 million and €3 million, respectively. Crastes must also serve a five-year ban from fund management.
But H2O is challenging the record fine, arguing against the allegations of non-compliance with investment rules, stating there was an “absence of any intentional error” by the company or individuals.
In a statement, H2O said the AMF’s Enforcement Committee “did not examine the question of liquidity at the date of acquisition of the unlisted securities, but at a much later date”.
The asset manager claims the delay “does not make sense from a legal or financial point of view”.
“After a detailed analysis of the ruling with its counsels, H2O AM vigorously contests the decision of the AMF EC, of which the sanction is disproportionate to the case. Based on the legal and factual elements of the case, H2O AM has therefore decided to lodge an appeal with the Conseil d’État,” the statement read.
H2O added the fine would “penalise” the asset manager’s ability to repay some of the €1.6 billion it owes investors.
The same day as the fine was issued, H2O said it would begin repaying unit shareholders, having earmarked €250 million for reimbursements.
It has also reshuffled its fund management line-up, with Crastes’ H2O MultiBonds FCP now co-managed by Thomas Delabre and Philippine Watteaux.
Loic Guilloux, previously co-CEO alongside Crastes, is now sole CEO, with Crastes now responsible for overseeing corporate and market strategy.
The FCA’s own investigation into H2O is ongoing.
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