A once high-flying asset manager will pay out £215million to investors who have cash trapped in illiquid funds linked to German financier Lars Windhorst.
The Financial Conduct Authority (FCA) has said H2O Asset Management must return money to shareholders after it failed to carry out proper due diligence on hard-to-sell securities tied to Tennor, a group founded by Windhorst (pictured with girlfriend Christine Barner).
It also found H2O lacked adequate procedures to manage conflicts of interest.
Scandals: Lars Windhorst (pictured with girlfriend Christine Barner) first shot to fame in the 1990s when he was hailed as a wunderkind of German business
That included over 50 instances where hospitality had been received but was not properly declared, including the use of a superyacht and private jet.
Founded in 2010, H2O was a star of European investment under chief executive Bruno Crastes, overseeing more than £26billion of assets.
But it suffered an investor exodus in 2019 after its exposure to Windhorst firms was revealed.
Withdrawals prompted the group to freeze £1.4billion of funds the following year, effectively trapping investors.
The group was fined a record £64million by French authorities in 2023.
But instead of a hefty fine, the FCA has imposed an order on H2O to repay investors whose funds had been trapped.
Aside from due diligence and conflict of interest failings, H2O provided regulators with ‘false and misleading statements and documentation’ including ‘fabricated records and minutes of meetings’, the FCA said.
‘H2O’s job was to manage funds properly and protect investors.
It failed to do this and, to make matters worse, repeatedly provided misleading information to the FCA,’ said Steve Smart, FCA director of enforcement and market oversight.
Windhorst shot to fame in the 1990s but the dotcom crash hit his ventures and he filed for personal bankruptcy in 2003.
He later rebuilt his fortune but in 2010 received a suspended prison sentence for ‘breach of trust’ in Germany.
H2O’s chief Loic Guilloux said: ‘We have significantly improved and consolidated our organisation and strengthened risk management and compliance teams, governance and internal procedures. These changes ensure that lessons from this period are embedded in our culture.’
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