The fines relate to seven French UCITS funds and investments in financial instruments issued by companies of the Tennor Group. The AMF said investments in the securities were not eligible due to a lack of necessary liability to meet redemption requests, that the securities "were not within the scope of the investment policy set out in the fund prospectuses, as they were not rated by a rating agency or issued by an issuer rated by a rating agency," and because H2O AM "did not have enough inflation to value these financial instruments reliably."
The AMF also said the manager had not complied with an investment ratio for these UCITS funds, with some holding more than 10% of debt securities issued by a single issuer in the Tennor Group.
Alongside the fine, Mr. Crastes was given a five-year ban on operating as a manager in France, directly or by delegation, or as an executive on certain legal entities. Mr. Chailley was also reprimanded, the AMF said.
"An appeal may be lodged against this decision," the AMF said.
The fines follow an investigation launched by the AMF in November 2019 over the company's compliance with investment rules in relation to private debt exposure. The firm froze several funds at the AMF's request in August 2020 over uncertainties in valuing illiquid assets that H2O AM was selling back to German financier Lars Windhorst at a steep discount, Bloomberg reported at the time. H2O created a side-pocket structure for seven strategies, the manager said.
Spokeswomen for H2O AM could not immediately be reached for comment. However, on Nov. 28, the firm issued a news release following a public hearing on the matter with the AMF.