The administrative sanction imposed by the CSSF followed an on-site inspection that took place from March to May 2022. Archive photo: Romain Gamba

The administrative sanction imposed by the CSSF followed an on-site inspection that took place from March to May 2022. Archive photo: Romain Gamba

Luxembourg’s Financial Sector Supervisory Commission (CSSF) has imposed an administrative sanction on DNB Asset Management S.A. (now deleted from the company register) for non-compliance with professional obligations related to general organisational requirements, oversight of delegates, rules of conduct and EMIR obligations.

The Financial Sector Supervisory Commission (CSSF) announced in a press release issued on that it had imposed an administrative sanction on the investment fund manager DNB Asset Management S.A. for non-compliance with professional obligations related to general organisational requirements, oversight of delegates, rules of conduct and EMIR (European Market Infrastructure Regulation) obligations.

The administrative sanction consists of a public statement and a reprimand, noted the CSSF, which added that the “nature, gravity and duration of the breaches existing at the time of the on-site inspection” and the manager’s conduct and past record were taken into account when determining the type of sanction. The sanction was imposed on 26 March 2024 and followed an on-site inspection of the manager between 4 March 2022 and 3 May 2022.

Details of the breaches

The CSSF identified several breaches, such as non-compliance with “general principles surrounding organisational requirements.” “The management information of the manager was insufficient in relation with the portfolio management, best execution and EMIR obligations,” said the CSSF. In addition, the manager’s multi-year internal audit plan for 2020-2022 didn’t include controls for “effectiveness of the best execution policy,” “compliance with EMIR obligations,” “adequacy of the accounting function of the manager” and “monitoring of complaints handling.”

The financial regulator also identified “material and persistent breaches in the manager’s oversight of the distributors, namely: inadequate process for the approval of new distributors; absence of initial due diligence on the distributors; breaches with regards to the periodic due diligence process; and lack of ongoing monitoring of the distributors.”

In addition, the CSSF identified the “absence of approvals of the list of brokers used by the portfolio manager of the manager” and  “a lack of involvement of the manager in the valuation process due to an excessive reliance on the pricing committee of the group to which the manager belonged.”

The CSSF also found that “the oversight arrangements of the manager did not enable it to assess the quality of the reporting in accordance with the EMIR Regulation as performed by its delegated portfolio manager.”

Now deleted from the company register

In its communiqué, the CSSF noted that “the sole shareholder of the manager decided to amend the corporate purpose of the manager and to put it into a voluntary liquidation” during an extraordinary general meeting on 13 May 2024. Once the manager’s voluntary liquidation was closed, it was deleted from the Luxembourg Trade and Company Register on 26 June 2024. The CSSF removed the manager from the official list of authorised management companies on 10 July 2024, with effect from 13 May 2024. DNB Asset Management S.A. had been registered on the company register since August 1990.

Migration

On 31 August 2023, DNB Asset Management , moving from DNB Asset Management S.A. to FundPartner Solutions (Europe) S.A., an entity of the Pictet Group.

Paperjam contacted DNB for comment. In reply, a spokesperson stated: “The restructuring of the DNB Asset Management S.A. (“company”) was initiated last year. The company was put into a voluntary liquidation and investment fund was fully transferred to a new management company as of October 2023. The decision was not related to sanctions imposed by CSSF.”

DNB Asset Management’s last annual report (for the year ended 31 December 2023 and submitted on 27 March 2024) stated that that as a result of a “strategic review of activities at DNB Group level,” the DNB Fund Sicav moved to another management company, FundPartner Solutions (Europe). Another outcome of the strategy review was that the DNB Group decided, going forward, to “focus its fund-related activities in Luxembourg exclusively on international marketing and sales, through a newly set-up Luxembourg branch of DNB Asset Management Norway.” Sales staff of the company were transferred to the new entity in October 2023, and as such, DNB Asset Management S.A. was expected to be formally liquidated in early 2024.

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