Windhorst sanctions are "unjust," according to H2O AM

H20 Asset Management has taken aim at the French regulator's planned punishment for its ties to illiquid bonds linked to German banker Lars Windhorst. The French financial authority, the Autorité des Marchés Financiers (AMF), has proposed that H2O be fined more than €90 million. Bruno Crastes, the founder of the asset manager, faces a €15 million punishment and a 10-year ban from the European investment business.

H20 has responded to the claims by calling them "unfair and disproportionate" and establishing a reserve to pay any potential costs pending the regulator's final decision.

The case follows the collapse of €1 billion-worth of funds two years ago due to unauthorised investments in illiquid Windhorst bonds.

According to the Financial Times, the regulator's enforcement committee suggested an additional €3 million fine for the asset manager's chief investment officer, Vincent Chailley, due to "severe shortcomings" in the investing process.

The regulator argued that the Paris-based firm was not authorised to invest in illiquid bonds through daily withdrawal-capable mutual funds.

In a client note shown to Funds Europe after the hearing, however, H20 argued that the levy was 'unfair' and refuted claims that it was not compliant with investment rules regarding transactions involving Lars Windhorst's Tennor Group and buy-and-sell-back transactions involving Lindnorst's holding company.

H2O said its managers have “firmly and factually contested the first two allegations brought in this case,” claiming they are “essentially technical matters".

“They regret the severity of the requested sanctions – which H2O AM deems unfair and disproportionate to the case and the rapporteur's conclusions – requested by the AMF Board.

“It is important to underline the complete absence of any fraud or intentional error on the part of H2O AM, Bruno Crastes and Vincent Chailley; both in the notification of grievances and in the rapporteur's report,” the note said.

The asset management did not refute charges that an investment ratio had been exceeded.

By fLEXI tEAM