Wealth management consultants, financial investment consultants, insurance brokers, insurers, etc.
Are you a professional (wealth management consultant, financial investment consultant, portfolio management company, insurer) and have some of your clients invested in units of H2O AM funds that have resulted in the creation of side-pockets? Do you want them to get compensation for their losses suffered?
The Association Collectif Porteurs H2O [H2O Bearers’ Collective Association] allows you to represent your clients in court, to obtain clarification on the situation of the funds blocked in the side-pockets, to ultimately obtain compensation due to the violations committed by the service providers involved in the management of the funds.
An interlocutory procedure for an expert witness report is pending at the Commercial Court of Paris on behalf of the members of the Collectif Porteurs H2O. We encourage all holders of H2O AM funds blocked in side pockets to join the legal action by becoming a member of the association.
H2O AM’s wrongdoings and lack of transparency have put professionals in a very difficult situation. Many clients don’t understand what happened and wonder what remedies they have at their disposal. Joining the association allows them to assert their rights by being regularly informed by their advisor, who is their representative in dealing with us.
H2O Asset Management is a management company offering investors the opportunity to invest in its funds (UCITS). These funds use providers such as KPMG Audit or Caceis Bank and are regulated by the AMF [Autorité des marchés financiers (French Financial Markets Authority)] (for those under French law).
Since its inception in 2010, H2O AM has applied a so-called “Global Macro” strategy consisting of investing in debt securities, currencies and equities. The funds quickly became very successful and their debt stock increased.
From 2015, H2O AM invested in illiquid private debt and equity securities of entities linked to the Tennor Group. These investments represent €2.25 billion according to the AMF.
In late June 2019, the Financial Times revealed the presence of these less-liquid and even illiquid assets in certain funds managed by H2O AM, and highlighted the links between the management company’s executives and Lars Windhorst, the nefarious boss of the Tennor Group.
In order to reduce the proportion of these illiquid securities in its funds, H2O AM carried out several types of transactions, probably in violation of the regulations: minimising the price of assets and complex buy-and-sellback transactions (for more information, see our summary presentation above).
In October 2020, under the pressure of the AMF, H2O AM separated the 7 funds involved to isolate the illiquid assets to be able to sell them over time: 7 holding funds (the “Side-Pockets”) were created. The total assets of these 7 holding funds are estimated at €1.64 billion upon their creation.
In May 2021, H2O AM entered into an agreement with Tennor to exchange some of the illiquid securities for new bonds (First Super Senior Secured Note) repayable in January 2022. The estimated valuation of the side-pockets was then only €1.4 billion.
Although no announcement has been made by the management company, we know that this repayment will likely never take place. Despite a moratorium agreement signed between Tennor Holding and H2O AM extending the repayment date of the bond issue to July 2022, no repayment has to date been made by Tennor
Tennor was declared bankrupt in November 2021 as a result of its inability to honour a debt of €30 million (i.e. 100 times less than what was borrowed from H2O AM). Tennor’s bankruptcy was lifted one month later after moratorium agreements were signed with creditors, which in no way assures the solvency of the group, which is continuing to undertake operations as risky as a majority stake in the Hertha Berlin football club.
Although it is tempting for H2O AM to attribute the responsibility for the losses it caused to advisors (asset managers, insurers, brokers, platforms, etc.), intermediaries were themselves misled in this case: the non-regulated investments in Tennor securities for more than 7 years are the sole responsibility of the fund management company, namely H2O AM.
As a professional, you have been the victim of misinformation by H2O AM on the anomalies of the funds’ management, misinformation that continued after the publication of the Financial Times article in June 2019 and until the suspension of transactions on 7 funds in August 2020 and the creation of the side-pockets in October 2020.
On 25 November 2022, the AMF Sanctions Committee met to re-examine the H2O AM case. It notified H2O AM Europe LLP, Bruno Crastes and Vincent Chailley of 3 grievances.
Non-compliance with investment rules in connection with transactions on illiquid Tennor securities;
Non-compliance with investment rules in the context of buy-and-sellback transactions underlying illiquid Tennor securities;
Exceeding the maximum holding ratio of debt securities issued by an entity.
The AMF Board has proposed historically harsh penalties:
A fine of €75 million and a reprimand against H2O AM Europe LLP.
For Bruno Crastes, a fine of €15 million and a 10-year ban on conducting the business of individual and collective management and on running a management company in the European Union
For Vincent Chailley, a fine of €3 million and a reprimand.
The AMF Sanctions Committee will issue its final decision in a few weeks.
The meeting of 25 November fully validates the Collectif Porteurs H2O’s approach, which has always considered that H2O AM had committed serious offences justifying compensation of unitholders deceived by its practices.
The Collectif Porteurs H2O is an association of investors founded in 2020 by Gérard Maurin, himself a wealth management advisor, in order to rally the unitholders of H2O AM funds and obtain compensation for damages suffered as a result of the creation of side-pockets. In order to advocate for the greatest number of investors, we need you: have your aggrieved clients join the association and represent them with us.
Joining the association and representing your clients before the peak of the upcoming media impact surrounding the litigation will help you strengthen the relationship of trust with your clients.
Indeed, several articles discuss the legal action in the press (for example, in Les Echos, on 29 September 2021 and Le Monde, on 20 January 2022) and encourage the unitholders to join the association. By having a proactive role with your clients, you are always better able to provide the consulting services they have entrusted to you.
Joining the Collectif Porteurs H2O represents a unique opportunity for your customers to recover losses and shortfalls due to non-regulatory operations of H2O AM funds. This loss can be assessed here.
Joining the association will allow, through the ongoing litigation, to implement all means to recover the losses suffered by investors.
All investors holding side-pockets can join this action, even if their H2O AM investments have delivered more gains than losses over the long term.
The return on these investments is not the subject of this action. It focuses on the violation by H2O AM and its service providers of their obligations under the financial regulations to which they are subject.
The litigation is led by lawyers specialising in financial regulation. The only participation requested from the members at the time of registration, of fifty euros, is used to cover the operating costs of the association.
Firm fees and procedural costs are paid by a third party funder, Deminor, who will only be compensated if successful. For more information, please visit our FAQs.
Professionals and their clients take no risk by joining the association: they are protected by the strategy of the interlocutory action for an expert witness report and by that of the future action on the merits.
The entities we are taking to court are H2O AM EUROPE and H2O AM LLP for their irregular management actions.
Investor membership through a professional will not violate the confidentiality of the information that will be communicated to the association.
The purpose of the association is to “assert and defend, by any means, the general interest of investors and professionals in the distribution of financial products”, by regularly communicating recent and reliable information to members and their representatives.
Becoming a member of the association will allow you to respond effectively to H2O AM’s failure to communicate on the irregularities in its management and on the position of the Tennor Group.
Association Collectif Porteurs H2O
17 rue Mesnil - 75116 PARIS