January 2023 Regulatory Updates

Key dates

30 December 2022

- AMF Enforcement Committee decision SAN-2023-01 imposing fines and sanctions

7 August 2023

- Conseil d'État rejects preliminary constitutionality question

13 June 2025

- Conseil d'État dismisses appeals (n. 471548, 471744), upholding sanctions and ordering €3,000 costs to AMF

Suggested considerations

• Review portfolios: Audit UCITS/AIF holdings for liquidity, rating compliance, prospectus alignment, and issuer/counterparty limits; divest non-eligible assets.
• Enhance due diligence: Implement robust processes for unlisted/illiquid securities valuation, liquidity risk modeling, and repo unwind risks; document all assessments.
• Strengthen governance: Senior managers must oversee investment ratios and eligibility; update procedures for buy & sell backs in exposure calculations.
• Depositary checks: Verify oversight of management company systems for ratios, legality, and prospectus terms.
• Training/remediation: Conduct firm-wide training on UCITS rules; test controls against AMF/FCA principles (e.g., skill/care, regulator relations).

What changed

• This is an enforcement decision, not new rules, but it reinforces existing UCITS requirements under French Monetary and Financial Code and AMF regulations:
• UCITS investments must exclude illiquid, unrated securities outside prospectus scopes; liquidity risks must be properly assessed to ensure redemption capabilities.
• Debt holdings per issuer capped at 10%; counterparty exposure (e.g., 5% limit) must include all relevant transactions like buy & sell backs.
• Reliable valuation information required; risks of unwinding transactions at market value must be evaluated. These align with parallel FCA findings on due diligence failures for Tennor investments...