Skip to main content

H2O faces 75 mn fine.

 

France’s financial regulator is seeking to fine H2O Asset Management a record €75mn and ban its chief executive from the investment industry for a decade over the firm’s extensive investments in illiquid bonds tied to German financier Lars Windhorst.

At the hearing of the French regulator’s enforcement committee, an AMF (Autorité des Marchés Financiers ) official alleged that there had been «grave deficiencies» in H2O’s investment process, arguing that the firm was not authorised to invest in such illiquid bonds in funds open to daily withdrawals from retail investors. The regulator’s recommendations come more than three years after the Financial Times exposed the scale of the firm’s outsized bet on Windhorst in 2019. Windhorst, a flamboyant financier who turned 46 this week, made his name in the 1990s as a teenage entrepreneur and was hailed as a wunderkind by then-German chancellor Helmut Kohl. In 2020, H2O was forced temporarily to halt redemptions on its core funds after the AMF raised concerns about its investments linked to the financier.

Two years later, investors’ money is still stuck in the so-called side pockets that H2O set up to house €1.6bn of these hard-to-sell assets. Once a well-respected money manager that oversaw €30bn of assets, H2O has lurched from crisis to crisis since the FT revealed the scale of its ties to Windhorst. The sum AMF seeks from H2O would exceed any previous fines it has levied, eclipsing the €32mn handed down to investment manager Amundi last year. The scale of the fines would also dwarf the provisions that H2O has so far disclosed for the case.

The recommendations were made to the AMF’s enforcement committee, an independent panel of judges and investment professionals. H2O and its co-founders defended themselves at the hearing, with a firm representative describing the proposed fines as «disproportionate». Bruno Crastes (co-founder of H2O) told the committee that «everything was done in the interests of investors» and noted that he also has a significant amount of his wealth invested in H2O’s funds. In addition, the firm disclosed in its 2021 accounts that it has not yet booked a provision concerning an FCA probe for «alleged non-compliance» with several of the regulator’s principles.

German authorities are investigating whether Windhorst breached the country’s banking law when he tried to raise money to repay H2O through a new investment vehicle in 2020. Windhorst denies wrongdoing.

www.sba.tax

Labels:

Comments

Post a Comment

Cloud Bookkeeping

HS2 cost cuts new routes and add delays.

 Trans­port depart­ment offi­cials have begun work on «Project Sil­ver­light» sug­gest­ing the high­speed rail scheme might face four addi­tional years of delay. The planned High Speed 2 rail line faces fur­ther delays of up to four years and more cuts to the project under plans being drawn up by min­is­ters to rein in its bal­loon­ing costs. The extra delays to the coun­try’s biggest infra­struc­ture project would mean that it would not be com­pleted until as late as 2045 — 12 years after ori­gin­ally planned. «This is a func­tion of infla­tion; we are hav­ing to find huge sav­ings because the cost of everything the depart­ment is already doing will have become so much more expens­ive by then,» said one gov­ern­ment offi­cial. In Octo­ber, the FT repor­ted that the Treas­ury had asked HS2’s man­age­ment team to identify poten­tial cuts or «scope reduc­tions» to the high-speed line. Trans­port depart­ment offi­cials have sub­sequently begun work on Project Sil­ver­light aimed at fi...
4 comments
Read more

Small business will be excluded from fraud law.

  Min­is­ters are plan­ning to exclude small busi­nesses from anti-fraud legis­la­tion by nar­row­ing the scope of a crim­inal offence tar­get­ing com­pan­ies that fail to pre­vent eco­nomic crimes. MPs and anti-cor­rup­tion cam­paign­ers had hoped the gov­ern­ment would seek to amend the eco­nomic crime and cor­por­ate trans­par­ency bill to ensure the new offence covered all com­pan­ies. The plans to limit the scope of the amend­ments will also dis­ap­point those who had hoped the legis­la­tion would remove key hurdles to the pro­sec­u­tion of white-col­lar crime. A new «fail­ure to pre­vent» offence for fraud would bring it in line with exist­ing sim­ilar cor­por­ate offences for bribery and tax eva­sion. At present, pro­sec­utors need only prove that organ­isa­tions lacked «reas­on­able» or «adequate» con­trols to pur­sue the offence in bribery and tax eva­sion cases. «It would be much more sens­ible for the gov­ern­ment to provide strong guid­ance for SMEs on what these pro­ce...
3 comments
Read more

Doubt on CS's collateral.

  Credit Suisse provided an emergency $140mn loan to Greensill Capital based partly on invoices to companies that deny ever doing the business stated on the documents. The Swiss bank provided the loan in October 2020, less than five months before the collapse of Greensill, a supply chain finance firm that counted former British prime minister David Cameron as a senior adviser. Invoices issued by metals magnate Sanjeev Gupta’s Liberty Commodities and sold to Greensill formed part of the collateral for the loan, according to documents seen by the Financial Times and people familiar with the transaction. Yet several of the parties named on the invoices have told the FT they did no business with Liberty. GFG has consistently denied any wrongdoing. Credit Suisse’s loan had a clause dictating that the collateral value had to be equal to or greater than the $140mn borrowed. The terms of the debt agreement only allowed invoices on Green-sill’s balance sheet to count towards this tally if t...
2 comments
Read more