AIF imposes record fine on H20 AM management company

The sanction fell and is heavy. In its decision on December 30, the Autorité des marchés Financiers (AMF) Sanctions Commission imposed a record fine on London-based management company H2O AM and its two founding directors. “several violations of professional obligations”. The fine amounts to 75 million euros for H2O, 15 million euros for managing director Bruno Crastes and 3 million euros for investment director Vincent Chailley, according to demands made in an open session in November 2022.

To make matters worse, in addition to these fines, he is banned from being a manager. “directly or by delegation”, or H20 leader for Bruno Crastes for five years. That sounds like a professional kill for one of the brightest traders of his generation, long considered a true “star” in the fixed income markets.

Appeal to the State Council

The commission noted “seriousness of violations” and “Investors’ losses, especially as a result of the blocking of their deposits”. Above all, he kept all the facts to himself when he ran several star funds to a former subsidiary of Natixis (sold to H20 management, even though the bank still owns 23% of the capital). which has long monopolized the best places in terms of performance and is a favorite of wealth management advisors (CGP) clients.

This Wednesday morning, the company H20 announced that it will appeal the sanction to the Council of State. “disproportionate” highlighted next to the file “that no intentional wrongdoing was done”. Logically, Bruno Castres is stepping down as general manager, however “He remains Chief Strategy Officer at the company.” Therefore, it is CEO Loic Guilloux who takes over the overall management.

Lars Windhorst Gallery

To summarize, the regulator accuses H20 AM of investing 2.2 billion euros in illiquid assets outside of any good governance rules, especially since all of these securities are related to German finance Lars Windhorst’s Tennor group.

In addition, the main question that neither the regulators nor H2O has really answered is: why two astute market people like Bruno Crastes and Vincent Chailley trusted 2.2 billion euros to a businessman whose press should be read to know the amount of sulfur. reputation. Especially since private capital has never been H2O AM’s cup of tea, known for its “global macro” management of highly liquid markets (rates, currencies, stocks, etc.). This is the name of the H20 store, which should emphasize the transparency and liquidity of its funds.

And in this case, there was never transparency or liquidity. The conflict took place in June 2019 Financial Times Several funds managed by H20 AM detect the presence of illiquid assets issued by Lars Windhorst companies. This information led to a crisis of confidence in H2O AM and the first wave of takeovers. Covid and the severe market crash in March 2021 completely reversed H20 AM’s bets and further weakened the structure, leading to a second wave of takeovers.

Mechanically, illiquid assets, which cannot be traded naturally in times of crisis, have more and more weight in funds, which fall in value in parallel with the decline in the markets. As a result, these assets represented a weighting greater than the maximum permissible limit of 10% held in the same asset (and/or the maximum exposure of 5% on the same counterparty). And partly in this regard, H2O objects to the AIF’s decision. “investigated the issue of liquidity not on the date of purchase of unlisted securities, but on a later date”.

Ring-fenced funds

After paying more than 8 billion euros, H2O AM was finally forced to cease operations on seven funds under French law at the end of August 2020, then to create the popular cantonal funds in October. side pockets , according to H20 AM, all illiquid assets were placed in order to be able to sell them better over time. Initially, these assets were depreciated at a cost of 1.6 billion side pockets, then in September 2022 it was devalued again to 1.1 billion euros.

Since then, H20 AM has promised an upcoming return that has been slow to arrive, without specifying the value of those assets. Meanwhile, Lars Windhorst’s holding company Tennor has been able to combine all of its debt from its creditors, including H20 AM, which could theoretically be repaid in 2022, into a single debt issue. H20 AM has always justified non-publication. net asset values side pockets to better negotiate with Tennor regarding the redemption of the issued securities.

Coincidence or not, H20 AM has announced the first phase of the new payment on its website. side pocketetc “In the next few days”. After the partial payment of the single debt made last December, “nominal will decrease by 250 million euros”. However, without specifying whether this amount corresponds to the first part of the compensation.


The AIF’s expectations are serious and may now prompt legal action by owners of side pocket units. The collective of depositors is in the process of taking legal steps to get compensation in particular. Moreover, the management company, which still manages 12.3 billion in assets, has already set aside 200 million euros to settle any litigation or sanctions.

The AIF sanctions are the most severe ever imposed on a management company. The watchdog had already fined Natixis 35 million euros in 2017, which was eventually reduced to 20 million euros. In August 2021, Amundi, the European leader in asset management, was also fined 32 million euros. “price manipulation” On operations carried out in 2014 and 2015.

The controller has a long time, much longer than the news. The AIF was criticized for its silence during the freezing of H2O AM funds or earlier during the first waves of redemptions in the summer of 2019. Then the question arose about the Ucits European regulations, which allow marketing under certain conditions. , alternative funds (hedge funds) directly from individuals.

H2O funds were Ucits funds, but due to their nature and leverage effect, the full extent of risk was not understood by subscribers and distribution networks (CGP, insurers, private management). The fact that these funds significantly outperformed the average of funds with the same management style over the period 2016-2020 quickly dispelled any questions.