Asset manager to pay €250m to investors in high risk investments

The FCA has announced that H2O AM LLP is to pay €250m to investors who have been unable to access their funds for 4 years after the firm failed to carry out proper due diligence on certain introduced investments, leading to investors holding high risk investments that were hard to sell. The FCA also found the firm, a French asset manager operating in the UK on a UCITS passport did not have adequate policies or procedures, did not exercise due skill and care in managing potential conflicts (including many instances of lavish hospitality enjoyed by staff and not declared) and had provided the regulator with false and misleading statements and documentation.

The FCA found breaches of Principles 2, 3 and 11, and would have imposed a penalty on the firm had it not agreed to make payment to investors whose investments are still trapped. The FCA also took into account that the AMF has already taken action against the firm (although the firm is appealing this). The firm has also already waived its rights to fees and investments of €320m and will apply to cancel its UK authorisation.