The Financial Sector Supervisory Commission (CSSF) announced in a that it had imposed an administrative fine on the investment fund manager Vistra Fund Management S.A. for non-compliance with professional obligations related to general organisational requirements, oversight of delegates and use of external valuers. The €23,000 fine was imposed on 18 June 2024 and came after the CSSF carried out an on-site inspection between 11 July and 19 August 2022.

In determining the type and amount of the administrative sanction, the CSSF noted that it took into consideration the fact that the manager had fully cooperated during the inspection and “confirmed having implemented corrective measures to remedy breaches identified.”

Details of the breaches

The CSSF stated that the manager did not comply with general principles surrounding organisational requirements. The regulator found that conducting officers met only once during 2021 and did not meet on a monthly basis from January 2022 to June 2022; the manager failed to implement a proper management information system; and meetings did not enable conducting officers to monitor all the activities of the manager and those of its delegates.

In addition, the manager had not implemented a compliance monitoring plan. The CSSF also said that “the manager did not put the necessary safeguards in place to prevent the use of the accounting system for fraudulent purposes. In particular, the CSSF identified that the manager had not implemented any control aiming at verifying the accuracy of the banking details used for the payment of invoices issued by its suppliers, neither in case of invoices issued by a new supplier nor in case of change of banking details of an existing supplier.”

Moreover, the “manager failed to ensure that the valuation function for some AIFs it manages was performed independently,” identifying “two cases where external valuers acted also as delegated portfolio managers or (sub)-investment advisors for the same fund(s) which could not guarantee the independent valuation of the AIFs’ assets.”

Vistra Fund Management also failed to comply with professional obligations related to the oversight of its delegates. “With the exception of one delegated portfolio manager, the CSSF identified that the manager had not finalised any initial due diligence with its delegated portfolio managers prior to the signature of the agreements,” noted the press release. And “the manager was not receiving any KPIs from its delegated portfolio managers or any other information aimed at monitoring on an ongoing basis the services provided by the latter.”

Paperjam contacted Vistra Fund Management for comment. In response, Jan Vanhoutte, managing director and conducting officer of Vistra Fund Management S.A., stated: “VFM has ensured that remedial actions that were underway at the time have since been implemented in a manner also recognised by the CSSF as adequate and concrete. We have significantly improved our internal governance as an organisation since the time of the events. In total, four full time positions were created in the functions in charge of the matters identified as unsatisfactory by the CSSF, and measures have been put into place to prevent this from happening in the future.”

Vanhoutte added: “It is important to note that VFM has never been confronted with similar actions from the CSSF and there are no further fines from the CSSF. Although this sanction has been published, it no longer reflects the competence and integrity, processes, and organisation of VFM. This one action by CSSF completes their investigation.”

“As a leading global provider of essential business services to companies and funds with 9,000+ experts in over 50 markets, Vistra holds itself to the highest ethical and compliance standards. We are committed to conducting business fairly, honestly and in accordance with all applicable laws and regulations. VFM is an integral part of the Vistra Group and is one of the top sources of growth for its funds business unit,” said Vanhoutte.

Vistra Fund Management was incorporated in Luxembourg in December 2015. The company employed 23 people in 2022 (four directors and 19 employees), according to its 2022 annual accounts. Its profit for the 2022 financial year came to €5,471,114 (up from €2,536,933 for the 2021 financial year).

Article updated 19 September at 15:00 with comment from Vistra Fund Management.