France's financial watchdog has fined H2O Asset Management and two of its managers close to €100m in total for several breaches relating to investments in illiquid debt linked to controversial German financier Lars Windhorst.
The Autorité des Marchés Financiers said the firm would be fined €75m, while co-founder Bruno Crastes and chief investment officer Vincent Chailley will need to pay €15m and €3m euros respectively, adding the decision could still be appealed.
H2O first came under scrutiny from the market and regulatory bodies in 2019 over its investments in illiquid bonds issued by several companies related to Windhorst, who owns Tennor Holdings.
In its ruling, the AMF said these fines would be followed by disciplinary sanctions, citing multiple failings in the acquisition and management of the Tennor assets.
This comes after the firm said on Tuesday (3 January) that it will begin the first reimbursement of its side-pocketed funds, paying out €250m to investors.
H2O to begin €250m reimbursement of side-pocketed funds
In a statement, the firm said it would begin repaying unitholders some of the €1.6bn it owes investors "in the next few days".
In August 2020, seven of the asset manager's funds were suspended, with its illiquid holdings ‘side-pocketed', after uncertainties around valuations and illiquid assets led to investors withdrawing billions.
This was followed by a statement in July 2022, where H2O AM laid out its plans to liquidate the suspended funds, as well as retrieve money from Windhorst's Tennor Holding "within the year".
The UK's FCA is also investigating H2O, while a group of more than 3,000 consumers known as Collectif Porteurs H2O is suing the firm in France. Last year, the group was granted a court order appointing an expert to review H2O trades linked to Windhorst.
International Investment's sister brand Investment Week has reached out to H2O Asset Management for comment.
