The Guernsey Financial Services Commission (GFSC) on Friday fined Louvre £42,000 ($54,591, €48,922) and issued penalties against managing director Kevin Gilligan and chairman and compliance officer Charles Tracy of £24,500 and £10,500, respectively.
The fines relate to an authorised collective investment scheme for which Louvre took over as the designated administrator in August 2013. The fund was a protected cell company with three cells.
In Guernsey, Louvre Funds provides fund establishment and administration services.
When contacted by International Adviser, both Louvre and GFSC declined to provide further comment or confirm the name of the fund.
Lack of understanding
Following an investigation into the fund and Louvre, GFSC found that the company did not fully understand its risk profile or the main underlying investment asset.
The regulator also found that the company had had a number of concerns regarding certain actions by the fund and their dubious benefit to investors but took no action.
These include holding back 20% of the fund and permitting the three cells to lend to each other.
“Inappropriate judgement and diligence”
Despite these concerns, Louvre failed to implement enhanced compliance procedures and did not notify GFSC of its worries.
Therefore, GFSC concluded that the company “did not administer the fund with the appropriate soundness of judgement and diligence”.
Gilligan, who was a director of the fund between October 2013 and September 2015, was found to have failed to demonstrate that he had acted with diligence.
GFSC added, however, that due to Gilligan’s level of experience “he was unable to withstand the pressures put on him by the promotor of the fund, who had a significant amount of control”.
As a result, Gilligan found himself in a position in which he had to change stance on a number of matters, the regulator said.
In his role as Louvre’s compliance officer, Tracy was also found to have failed to act with diligence and soundness of judgement.
He had a significant role in ensuring compliance standards were satisfied but failed to put enhanced compliance procedures in place despite being aware of the concerns regarding the fund.
Full cooperation
GFSC recognised that Louvre has taken steps to resolve its compliance problems, including reviewing their processes and implementing a number of changes to their policies and procedures.
The regulator added that, at all times, Louvre and the directors cooperated fully with the commission and agreed to settle at an early stage of the process. This was taken into account by applying a discount to the penalties imposed.
Louvre Fund
Louvre Fund administers both open and closed ended funds, as well as servicing Guernsey authorised and ‘fast track’ registered funds regulated by GFSC.
The company is part of Louvre Group, which has offices in the British Virgin Islands, Cayman Islands, Dubai, Hong Kong, London, and Switzerland. Established in 1976, Louvre Group also provides fiduciary and corporate services to both private and institutional clients.
