H2O put fund money into illiquid Tennor debt — and settled for €570M

H2O Asset Management ran bond funds out of London with €34 billion under management in 2019. In June that year an exposé about the funds' exposure to illiquid private debt linked to Tennor Holding, the vehicle of financier Lars Windhorst, started a run: by mid-July assets had fallen to about €26 billion, and the FCA and France's AMF both opened investigations.

The exit never fully reopened. In August 2020 the AMF suspended subscriptions and redemptions in three H2O funds over valuation and illiquidity, and H2O extended the suspension to its remaining funds. When the vehicles reopened on 14 October 2020, the Tennor-linked assets had been carved into side pockets, and investors stayed locked out of that part.

The FCA later found that between 2015 and 2019 H2O had failed to do adequate due diligence on the 'highly illiquid' investments, had failed to deal with the regulator openly and cooperatively — fabricated documents and misleading information among the findings — and had logged more than 50 undisclosed hospitality items, including superyacht and private-jet hospitality.

The bill arrived on 7 August 2024: no formal fine, but €250 million made available to affected investors and more than €320 million of fees and investments waived — €570 million in total, larger than the FCA's previous record penalty, the £284 million imposed on Barclays in 2015. H2O also agreed to give up its UK permissions by the end of 2024. By then €229 million had already been repaid, and the firm's offer put recoveries for accepting unitholders at an estimated 87–93%.