The Financial Sector Supervisory Commission (CSSF) announced in a that it had imposed an administrative fine on the investment fund manager Funds Avenue S.A. (formerly Fuchs Asset Management S.A.) for “noncompliance with professional obligations related to general organisational requirements and rules of conduct.”

The €696,547 fine was imposed on 19 December 2024 and came after an on-site inspection focused on corporate governance aspects and conducted between 19 June 2023 and 29 September 2023, said the CSSF.

Details of the breaches

During the inspection, the regulator identified “persistent breaches” in the manager’s internal governance framework. In particular:

—“The CSSF identified shortcomings in relation to the control of the representation expenses of a member of the executive committee leading the company to pay for expenses that were not supported by evidence.” It also found that “all the required topics of the management information were not properly covered during the meetings of the executive committee and that the manager did not have executive committee packs to support the work of the said committee.”

—“The manager failed to act honestly and fairly in conducting its business activities in the best interest of the managed Ucits,” added the financial regulator. “The CSSF identified that the manager participated in setting up a transactions fees retrocessions scheme through a business introducer agreement, benefiting a company that provided none of the services mentioned in the said agreement. Furthermore, it was found that one of the manager’s executives had close ties with the responsible person at the company benefiting from these transactions fees retrocessions. This situation led the impacted funds to ultimately pay an excess of transaction fees.” There were also shortcoming related to the monitoring of “delegated portfolio managers with regards to the best execution policy.”

—“The manager failed to employ efficiently the resources and procedures that are necessary for the proper performance of its business activities,” noted the CSSF, who also said in its press release that it had “identified several invoices/expenses paid by the manager for services/benefits that are not related to its business activity, including private jet expenses for personal trips of an executive committee member and its close family, as well as costs related to the maintenance of private vehicles.”

—Finally, “the manager did not try to avoid conflict of interests and failed to ensure that the Ucits it manages are fairly treated when conflicts of interests cannot be avoided.”

Corrective measures taken

When determining the amount and type of the fine, the CSSF noted in its communiqué that it took into account the gravity and duration of the breaches, the degree of responsibility of the manager for the infringement, the financial strength of the manager, the importance of the profits gained or losses avoided by the person responsible, damage to other persons and the level of cooperation of the manager with the CSSF. The regulator also took into account the fact that the manager confirmed “having implemented corrective measures in order to remedy to the identified breaches.”

The Luxembourg district court in July 2023 ordered the . The group’s separately run management company, Fuchs Asset Management, and announced a strategic partnership with Trustmoore. Trustmoore Group in September 2024 announced that it had .

Paperjam contacted Funds Avenue and Trustmoore Group for comment. In response, the management team of Funds Avenue said: “The company emphasises that the situations mentioned by the CSSF refer to elements observed in the past and that all corrective measures and procedures are in place in order to fulfil its professional obligations. This reflects the current management’s formal commitment to continuous improvement. The fine itself has been fully paid and has no impact on the financial stability and ongoing activity of the company.”

“With a robust governance framework in place and a new ownership structure including Trustmoore alongside the management team, the company is well-positioned for future growth and to continue delivering value to its clients and their investors.”