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A once-successful asset manager is to pay £215m to investors holding cash trapped in illiquid funds linked to German financier Lars Windhorst.
The Financial Conduct Authority (FCA) has told H2O Asset Management must return money to shareholders after failing to carry out due diligence on hard-to-sell securities linked to Tennor, a group founded by Windhorst (pictured with his girlfriend Christine Barner).
It also found that H2O lacked adequate procedures to manage conflicts of interest.
Scandals: Lars Windhorst (pictured with girlfriend Christine Barner) first rose to fame in the 1990s when he was hailed as a child prodigy of the German business world.
This includes more than 50 cases where hospitality was received but not properly declared, including the use of a superyacht and a private jet.
Founded in 2010, H2O was a star of European investment under Bruno Crastes, overseeing more than £26bn in assets.
But it suffered an exodus of investors in 2019 after its exposure to Windhorst’s companies was revealed.
The withdrawals led the group to freeze £1.4bn of funds the following year, effectively trapping investors.
French authorities fined the group a record £64m in 2023.
But instead of a hefty fine, the FCA has ordered H2O to reimburse investors whose funds had been trapped.
In addition to the due diligence and conflict of interest failures, H2O provided regulators with “false and misleading statements and documentation,” including “falsified meeting records and minutes,” the FCA said.
‘H2O’s job was to properly manage the funds and protect investors.
“It failed to do so and, to make matters worse, it repeatedly provided misleading information to the FCA,” said Steve Smart, the FCA’s director of enforcement and market oversight.
Windhorst rose to fame in the 1990s, but the dot-com crash took a toll on his business ventures and he declared personal bankruptcy in 2003.
He later rebuilt his fortune, but in 2010 he received a suspended prison sentence for “breach of trust” in Germany.
Loic Guilloux, Director of H2O, said: “We have significantly improved and consolidated our organisation and strengthened our risk management and compliance teams, governance and internal procedures. These changes ensure that the lessons of this period are embedded in our culture.”
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