AMF Slaps British Investment Company H2O AM LLP and Its Two Executives

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.

In its decision of 30 December 2022, the Committee imposed fines on H2O AM LLP, Mr. Bruno Crastes and Mr. Vincent Chailley of respectively €75 million, €15 million and €3 million, each with a disciplinary sanction, for several breaches committed in the management of French funds relating to investments in financial instruments.

The AMF Board had notified the respondents of complaints relating to investments made by H2O AM LLP on behalf of 7 French UCITS (Adagio, Allegro, Moderato, Multibonds, Multiequities, Multistrategies and Vivace) in financial instruments issued by companies of the Tennor group, either directly or through transactions consisting of an immediate purchase coupled with a forward sale of securities at a pre-agreed date and price ("buy & sell back" transactions).

The Committee considered that H2O AM LLP had invested on behalf of some of these UCITS in financial instruments issued by companies of the Tennor group that were not eligible for investment by UCITS. The Committee also found that H2O AM LLP had not complied with an investment ratio applicable to these UCITS, since some of them held more than 10% of debt securities issued by a single issuer in the Tennor group.

With regard to investments made through buy & sell back transactions, the Committee considered that H2O AM LLP had carried out these transactions whose underlying securities were issued by companies of the Tennor group, even though these transactions were not eligible for investment by UCITS on several grounds. In particular, the Committee considered that H2O AM LLP had not taken sufficient account of the risks preventing the funds from unwinding these transactions at their market value, at their initiative and at any time. It also found that some of these transactions were not taken into account in calculating the maximum 5% counterparty risk exposure to a single counterparty.

The Committee found that these breaches were attributable to Mr. Crastes and Mr. Chailley, respectively Chief Executive Officer and Chief Investment Officer of H2O AM LLP at the time of the events.