The AMF Enforcement Committee fines a management company and its chairman for breaches of their professional obligations
In its decision of 24 September 2020, the Enforcement Committee fined the asset management company, Société de gestion des fonds d’investissement de Bretagne ("Nestadio Capital") €10,000, and also issued a reprimand. It also imposed a fine of €100,000 on Florent de Kersauson, the manager of the company at the time of the events, together with a five-year prohibition to practice as manager or director of a management company.
Nestadio Capital is an asset management company that was managing some €44 million on behalf of 21 funds as at 31 December 2017.
The Enforcement Committee upheld six of the seven breaches alleged against this company.
It found that Nestadio Capital had not established the operational procedures needed to regulate its investment procedure.
It also found that the company had made an investment on behalf of a fund without ensuring that this investment was in the interest of the unitholders of this fund.
The Committee also considered that the company had compromised the interests of unitholders by granting advances on current accountand bank transfers to a company facing such difficulties that there was a very high risk that these payments would not be recovered. The Committee also found that the company had not succeeded in effectively managing a situation of potential conflict of interest resulting from the dual mandates of Mr de Kersauson, who was a manager both of Nestadio Capital and of the company that received the above-mentioned bank transfers and advances on current account.
The Committee also considered that by failing to distribute the cash resulting from the liquidation of the two funds to the unitholders concerned as and when these transactions are completed, the management company had not acted with the diligence, care, competence and professionalism required to best serve the interests of these unitholders.
It also noted that between September 2017 and April 2018, the management company did not have a compliance officer.
Lastly, the Committee found that the management company had failed to fulfil its obligation of diligence and loyalty in cooperating with the investigation, in particular with regard to the number of unanswered or incomplete requests, which was clearly disproportionate to the total number of requests made by the investigators.
The Committee considered that all these breaches were attributable to Mr. de Kersauson in his capacity as executive manager of Nestadio Capital at the time of the events.
The Committee however dismissed the alleged breach concerning the absence of an effective and transparent procedure for reasonable and prompt handling of complaints received from clients, as well as part of a breach concerning the failure to identify and correct the inappropriate and non-operational nature of applicable procedures.
An appeal may be lodged against this decision.
About the Enforcement Committee
The Enforcement Committee, which is made up of judges and professionals, has total freedom to make decisions. It can impose sanctions on any person or company whose practices contravene laws and regulations that fall within the jurisdiction of the AMF. It ratifies settlement agreements signed by the Secretary General and respondents. And it takes part in the AMF’s educational efforts by clarifying financial regulations when explaining its decisions.
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