The AMF Enforcement Committee fines the British company H2O AM LLP and two of its executives at the time of the facts for several breaches of their professional obligations
Executive Summary
The AMF Enforcement Committee fined UK asset manager H2O AM LLP €75 million and its executives Bruno Crastes (€15 million, plus a 5-year ban) and Vincent Chailley (€3 million) for breaches in managing French UCITS funds, including ineligible Tennor Group investments, liquidity risks, valuation failures, and non-compliance with investment ratios and counterparty limits. This matters as it underscores AMF's strict enforcement on UCITS eligibility, risk management, and prospectus adherence, with cross-border implications confirmed by the Conseil d'État's dismissal of appeals on 13 June 2025. It signals heightened scrutiny on illiquid, unrated assets and "buy & sell back" transactions for EU asset managers. #
What Changed
- This is an enforcement decision, not new rules, but it reinforces existing UCITS requirements under French Monetary and Financial Code and AMF regulations:
- UCITS investments must exclude illiquid, unrated securities outside prospectus scopes; liquidity risks must be properly assessed to ensure redemption capabilities.
- Debt holdings per issuer capped at 10%; counterparty exposure (e.g., 5% limit) must include all relevant transactions like buy & sell backs.
- Reliable valuation information required; risks of unwinding transactions at market value must be evaluated. These align with parallel FCA findings on due diligence failures for Tennor investments (2015-2019).
Suggested Considerations
- Review portfolios: Audit UCITS/AIF holdings for liquidity, rating compliance, prospectus alignment, and issuer/counterparty limits; divest non-eligible assets.
- Enhance due diligence: Implement robust processes for unlisted/illiquid securities valuation, liquidity risk modeling, and repo unwind risks; document all assessments.
- Strengthen governance: Senior managers must oversee investment ratios and eligibility; update procedures for buy & sell backs in exposure calculations.
- Depositary checks: Verify oversight of management company systems for ratios, legality, and prospectus terms.
- Training/remediation: Conduct firm-wide training on UCITS rules; test controls against AMF/FCA principles (e.g., skill/care, regulator relations).
Key Dates
Compliance Impact
Urgency: High - Finalized enforcement (June 2025) with massive fines (€93M total) and bans demonstrates AMF's willingness to pursue personal/executive liability for UCITS breaches, especially cross-border. Matters for firms with illiquid strategies, as it amplifies post-2020 liquidity crisis lessons (e.g., H2O fund gates), risking similar sanctions amid rising AMF actions on depositaries and manag
Who is Affected
References
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Summary
Sanctions & settlements Journalists Investment management companies The AMF Enforcement Committee fines the British company H2O AM LLP and two of its executives at the time of the facts for several breaches of their professional obligations