Record fine of 93 million euros against the management company H2O and its founders

The Financial Markets Authority Sanctions Commission on Tuesday imposed a record €93 million fine on asset management company H2O and two of its founders for violating investor protection rules.

The fine is 75 million euros for H2O, to which are added 15 million euros for Bruno Crustes and 3 million euros for Vincent Chailly, in accordance with the requirements adopted at a public meeting at the end of November. The commission highlighted the “harm suffered by investors, in particular as a result of the blocking of their savings” and the “seriousness of the violations.”

Bruno Krastes, Managing Director at the time of the events, was also banned from being a manager for 5 years, while H2O and Vincent Schailly, then Chief Investment Officer, were reprimanded.

Funds invested in Tennor’s private debt

The Sanctions Committee has satisfied all claims against H2O in connection with its investments in the financial securities of the Tennor group associated with the controversial German businessman Lars Windhorst. In more than three years, prior to the suspension of related funds from H20 in August 2020, the company purchased €2.25 billion worth of securities corresponding to Tennor’s private debt.

The AMF specifically cited the “insufficient liquidity” of these instruments, the fact that they “did not fall within the scope of the investment policy set out in the fund’s prospectus”, and the fact that H2O did not have “enough information” to invest. “reliably”.

H2O announced Tuesday ahead of the release of the sanction that it would refund “in the coming days” the first part of the blocked funds. They were signed by thousands of contributors, mostly French.

“H2O lied to us”

According to Gérard Morin, President of Collectif Porteurs H2O, whose 2,300 members have placed a total of €70m in funds frozen for more than two years, a total of €1.6bn has been blocked. “H2O lied to us, saying that Tennor’s assets comprised only 2% of portfolios, when in the end their share in some funds rose to 35%,” the financier accuses.

The H2O carriers association says it intends to sue the financial company in early 2023, “either in the commercial court or in the district court,” says Gerard Morin. “At the moment, we have applied to the arbitration court to better understand the damage, and we have been provided with an expertise,” he continues. He wants to claim compensation for more than 70 million euros blocked due to “deficit over the years: the markets have recovered from Covid, there has been inflation and money is blocked for two years, this is harmful. »