H2O Asset Administration to pay buyers €250mn after FCA finds ‘severe breaches’

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H2O Asset Management has agreed to pay €250mn to investors after the UK’s Financial Conduct Authority found it committed “serious breaches” in relation to illiquid investments.

Once a star of the European investment world that oversaw more than €30bn at its peak, H2O was plunged into crisis in 2019 after the Financial Times revealed it had substantial exposure to hard-to-sell securities tied to the controversial financier Lars Windhorst.

The FCA said on Wednesday the firm had “failed to carry out proper due diligence” on these investments, while also failing to declare hospitality that included “the use of a superyacht and private jet”.

The regulator also said H2O had provided it with “false and misleading statements and documentation” including “fabricated records and minutes of meetings”.

The FCA said it would have imposed a “substantial fine” on the asset manager but instead agreed that H2O would make a €250mn payment to investors whose funds have been trapped for years.

H20 will also apply to cancel its UK regulatory authorisation by the end of the year.

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