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French financial authority fines Natixis €35 million over misuse of redemption fees

Friday, July 28, 2017

Benedicte Gravrand, Opalesque Geneva:

The AMF's Enforcement Committee has issued a warning to Natixis Asset Management and fined the company €35m ($40.9m), the largest fine it has ever imposed, for having breached its professional obligations in the management of formula funds between 2012 and 2015.

"On maturity, these funds offered a total guarantee on the initially invested capital as well as a performance predetermined by a mathematical formula," says the announcement. "For each fund, Natixis Asset Management constituted a "cushion" reserve fed by a "structuring margin" and a part of the fees owed by unit holders in the event of early redemption."

After inspecting 133 formula funds managed by Natixis, the AMF found four regulatory breaches concerning the redemption fees on some of the funds. Some of the information provided in the fund prospectuses was inexact and misleading, as the redemption fees only benefited the funds in certain cases. There were also unjustified charges evaluated at €15.6m "through the practically immediate transfer of net redemption fees from the net assets of the funds to a liability account, a transaction having led to a decrease in the net asset value of the funds and the entry in an account of which Natixis Asset Management was the sole beneficiary." ......................

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