LONDON, November 12 (Businesshala) – The EU securities watchdog is conducting a preliminary investigation into whether Luxembourg’s regulator oversaw a group of investment funds in breach of EU rules, according to an email seen by Businesshala. has done.
The European Securities and Markets Authority (ESMA) said in an email that it was monitoring Luxembourg regulator CSSF’s group of funds called LFP i SICAV.
LFP I is a series of SICAV funds that were run by asset manager Luxembourg Fund Partners, many of which have since closed down.
ESMA said in a September 1 email that it aimed to finalize the preliminary investigation “this autumn”.
An ESMA spokesperson said he could not comment on any specific matter. A CSSF spokesperson also said that he could not comment on the issue.
The investigation follows a complaint by David Mapley, who is representing investors in the fund seeking lost cash. Mapley said in a complaint seen by Businesshala that the CSSF had failed to maintain the EU’s MiFID II rules related to investor protection.
One of the largest funds in LFP I SICAV, the hedge fund Columna Commodities Fund, collapsed in late 2016.
Alter Domus, a Luxembourg fund platform and administrator with financial backing from private equity giant Permira, bought Luxembourg Fund Partners in December 2017 following the collapse of Columna.
The assets under management (AUM) of LFP I SICAV were then approximately 400 million euros ($458 million). According to Maply, its AUM is currently around €20 million.
Alter Domus did not immediately respond to a request for comment.
Preliminary investigation by ESMA is the first step before deciding whether to proceed for formal investigation.
ESMA has no authority to fine CSSF if it conducts a thorough investigation and believes there has been a violation of EU law, known as an Article 17 investigation. But it can publicly call on the Luxembourg watchdog to make changes if necessary.
The EU’s executive European Commission could also initiate infringement proceedings, a move that could end in the bloc’s top court.
ESMA requested information from three national watchdogs in 2019 to determine whether a formal breach of EU law investigation should be opened. Last year, it received 196 complaints of alleged violations of the law by national regulators, but none have yet been upheld.
Last year, ESMA criticized Germany’s BaFin regulator for not doing enough to stop Wirecard fraud under a separate type of investigation known as peer review.