Asset manager H2O is to pay €250m (£214.7m) to investors who have been unable to access their funds since 2020, following an investigation by the Financial Conduct Authority (FCA).

Between April 2015 and November 2019, H2O failed to carry out due diligence on investments relating to the Tennor Group of companies owned by Lars Windhorst, or other companies he introduced.

The FCA has described the breaches as “serious” and called the investments “high risk and hard to sell”.

According to the regulator, H2O also did not have adequate procedures or exercise due skill and care in managing potential conflicts of interest. The FCA identified over 50 instances where hospitality had been received by H2O employees but was not properly declared, including the use of a superyacht and private jet.

The asset manager also provided false and misleading statements and documentation to the regulator, such as fabricated records and minutes of meetings.

“H2O’s job was to manage its funds properly and protect investors,” joint executive director of enforcement and market oversight at the FCA, Steve Smart, said. “It failed to do this and, to make matters worse, it repeatedly provided misleading information to the FCA.

“Through this settlement the FCA has secured money for affected investors and agreement that H2O will stop operating regulated business in the UK.”

A significant part of the €250m sum has been made available by way of voluntary contribution from the H2O Group.

H2O has waived its rights to fees and investments totalling €320m (£274.8m) and will apply to cancel its UK authorisation by the end of the year.

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