High Court confirms near €400k fine imposed by Central Bank
High Court Reporter
A near €400,000 fine imposed by the Central Bank on a unit of fund manager Waystone, the Irish financial services giant, has been confirmed by the High Court.
The President of the High Court , Mr Justice David Barniville, confirmed the sanction against the unit, Waystone Fund Management (IE) Ltd, at the High Court on Monday.
This was the first such application to be brought by the Central Bank to the High Court. The fine of €393,512 will now have to be paid within seven days.
The judge who will give a written judgement on the matter later made the confirmation and noted the Central Bank has set out all the steps it had taken.
The case related to the management of a €17.7 million investment in illiquid, hard to value private assets, loan notes between 2018 and 2019.
Opening the application to the court, Claire Hogan BL for the Central Bank said there were “eight prescribed contraventions” admitted by the Waystone unit. She said the sanctions did not take effect until confirmed by the High Court.
Waystone Fund Management (WFM) agreed the facts and admitted the prescribed contraventions and on this basis the Central Bank decided that further investigation was not necessary and it was appropriate to imposed a reprimand but also a monetary penalty of €562,160 which with a 30 per cent settlement scheme discount brought the total to €393, 512. WFM had agreed to the sanctions.
The case related to an alternative investment fund launched in October 2018 and which targeted investors where the minimum subscription was €100,000.
In late 2019 an auditor identified concerns about the loan notes during the annual audit including the identification of conflicts of interest and concerns in relation to the methodology and the accuracy of the valuations being provided by the issuer.
WFM sought the return of the fund’s investment in the loan notes, and in January 2020 €7.5 milllion was returned but no further monies were ever returned.
On August 4th, 2020 on the recommendation of WFM a decision to suspend investor dealing the was taken and additional subscriptions or investor redemptions were also stopped.
Investors are believed to have lost in the region of €10.2 million but WFM was later party to a settlement reached with the fund’s investors which saw them recover their initial investment in the notes and some costs.
On August 5th, 2020 the High Court heard the Central Bank was notified that the fund had been suspended due to a delay in the return of the funds invested in the loan notes and this was the first time that the Central Bank was notified of any issues relation to the investment in the loan notes.
The Central Bank later found that that WFM had breached requirements of the 2013 Investment Fund regulations including a failure to conduct adequate due diligence and monitoring, treat all investors fairly and act in the best interest of investors.
WFM is no longer active having transferred its fund management business to another entity within the Waystone Group in 2022.
