24/11/2011
Madoff: French regulator fines two asset management firms
Two asset management firms, EIM France SAS (EIM) and Alternative Leaders France (ALF) have been sentenced to pay fines of EUR300,000 and EUR150,000, respectively, by the French financial market regulator, the Autorité des marchés financiers (AMF), for shortfalls in the establishment of and adherence to procedures which could have allowed them to identify the risks related to some “Madoff” investments.The verdict of the Sanctions Commission of the regulator, published on the regulator’s website on 22 November, and dated 21 October 2011, cites failures at the two asset management firms concerning their due diligence obligations and professionalism in risk controlling for third-party investments.Concretely, following the discovery of fraud on the part of Bernard Madoff, controls were undertaken by the AMF “to determine, in general, whether procedures established by portfolio management firms to identify the nature of risks concerned and the level of these risks which may be tolerable, when selecting and monitoring hedge funds in which they invest.” The Commission adds that “the companies which received sanctions did not have the elements which would have been likely to constitute a reliable support for the investment decisions that needed to be taken, not in opacity, without access either to the premises or the teams at Bernard L. Madoff Investment Securities, nor to the economic models employed, but in clarity, after creating diligence which is indispensable to protect the interests of shareholders.”
