The AMF ( The French Financial Markets Authority) fined Natixis € 35 million for overcharging investors in connection with its formula funds ( structured product that guarantees the capital invested in addition to a return determined by a mathematical formula).
The AMF is accusing Natixis of setting up a reserve for each fund which was bolstered in part by charges paid by investors who chose to redeem the product ahead of its maturity date. Natixis explained that the practice was mainly to guard investors from regulatory, operational and taxation risks not covered by any other guarantee.
The AMF said it had identified several breaches with regard to redemption fees and declared that Natixis did not respect the obligation to act solely in the interests of investors, who were unfairly overcharged €15.6m. Natixis also overrun the maximal rates of asset management provided in the prospectuses for a total of €3.6m. The Sanction Commission also identified that Natixis over-charged €12.5m for structural margin.
Natixis said that formula funds differed from regular funds and that, consequently, there was a lack of guidance over how they should be governed.
Natixis underlined that there had been no client detriment and declared that they will appeal against the decision at the Conseil d’Etat, the French supreme court of the administrative order.
Read the full article in The Financial Times here
Read the Decision adopted by the AMF ( in French and English) here