uncover inconsistencies in H2O’s responses, the firm eventually admitted that Crastes, Chailley, and other senior managers had accepted hospitality from Windhorst on numerous occasions. This included trips on his private jet and superyacht, as well as lavish dinners and other gifts.
The FCA’s findings, which were published last week, revealed the extent of H2O’s attempts to cover up its lax due diligence processes and the cozy relationship between its top executives and Windhorst. The regulator described H2O’s breaches as “extremely serious” and accused the firm of attempting to “conceal certain matters” to hide the severity of its failings.
As part of its settlement with the FCA, H2O agreed to pay €250mn to investors and will apply to cancel its UK regulatory authorization. The firm stated that it has since overhauled its risk management and compliance teams, governance, and internal procedures in response to the regulator’s findings.
The scandal surrounding H2O Asset Management serves as a cautionary tale for other investment firms about the risks of failing to conduct proper due diligence and the consequences of attempting to cover up regulatory breaches. It also highlights the dangers of allowing personal relationships with questionable individuals to influence investment decisions, as seen in the case of Crastes’s close ties to Windhorst. Ultimately, transparency, integrity, and accountability are crucial for maintaining trust with investors and regulatory authorities in the financial industry.