Today the German regulator became the latest in Europe to launch an investigation into its domestic asset management market to determine whether local companies mis-sold funds to retail clients.
Guillaume Prache, managing director of BETTER FINANCE, the investor rights group that called on Esma to investigate closet tracking in 2014, commented that the German regulator’s decision was “good news”.
But Mr Prache is unhappy with Esma’s decision not to release the names of the funds it identified as potential closet trackers.
“We strongly believe the refusal from the EU supervisor to disclose the names of the offending funds it identified after more than a year of investigations is not compliant with its legal duty to enhance investor protection in the EU,” wrote Mr Prache in a letter to the European Commission to ask it to force Esma to disclose the names.
But a spokesperson from Esma said that it will not name and shame any funds: “Definitive evidence of closet indexing will require a more detailed follow-up by national authorities. We are therefore not in a position to provide [the] names of individual funds.”
Guillaume Prache is disappointed by this stance. “This is not acceptable and contradicts Esma’s legal duty to enhance investor protection,” he says.
The regulator’s findings, published this month, were troubling: between 5 and 15 per cent of actively managed retail equity funds “could potentially be closet indexers”, Esma said.
Mr Giegold agrees: “If Esma has found risks to investor protection, it should respond with a public warning. I will discuss the matter personally with Steven Maijoor [chairman of Esma]. He should publish the names [of the problem funds], as it is clearly doubtful that investors are receiving the services they have paid for.”
Please read the full articles here:
- Financial Times:German regulator launches closet-tracker investigation
- Financial Times:Pressure to reveal closet trackers intensifies
- Financial Times:EU body calls for naming and shaming of closet trackers