The French regulator, AMF, has imposed a fine of €200,000 on 123 Investment Managers through its enforcement committee over a string of compliance breaches.
The fine follows an investigation and a public hearing concerning procedures relating to marketing and disclosure of information to third parties. The AFM’s probe found these arrangements were not operational insofar as they contained inaccurate regulatory references and did not specify the controls carried out by the compliance and internal control officer.
The French regulator’s enforcement commission said the firm was under scrutiny for a series of control failures. It also found that 123 Investment Managers had failed to provide accurate, clear and non-misleading information on “the characteristics of the funds under management and the fees charged in its emails, videos, reports and in a letter sent to investors.”
The asset manager said it will cover the sum from existing provisions in its balance sheet and the decision will have no impact on the group’s financial results.
However, the committee found that 123 Investment Managers had not breached its obligation to act in a professional manner by not informing its clients, during the period under review, of “the existence of an advisor working with the fund or the management company.”
The committee also noted that 123 Investment Managers had indeed provided this information to clients during the fund’s creation phase. It also dismissed this alleged breach with regard to the payment of related management fees to the advisor, after noting that it had not acted in a manner contrary to the rules of the fund in question.
“The Committee also found that 123 Investment Managers did not have a procedure for tracing advice received from third parties and that it did not track this advice and the management decisions adopted as a result,” the statement reads.
AMF turns eye to FX brokers
The AMF, as part of its intensified market supervision, fined publicly listed Polish FX brokerage XTB earlier this year with a €300,000 penalty to settle charges.
XTB’s French subsidiary was accused of publishing misleading adverts and failing to carry out proper due diligence on new clients.
The Autorité des Marchés Financiers said that it had issued XTB the fine for numerous breaches of regulation between November 2013 and February 2020.
During a review of XTB’s compliance over the period, the AMF found that X-Trade Brokers had breached its restrictions on selling contracts for difference (CFDs) to retail clients. The watchdog added that the broker hadn’t put appropriate risk warnings on its website, seemingly tweaked some of the wording used in its marketing materials. In Europe, the CFDs regulations impose a standardised risk warning, including the percentage of losses on a CFD provider’s retail investor accounts.