Case The AGEO company offers financial advisor services in France either straight to finish traders or not directly by way of partnerships. From March 214 to Might 2016, AGEO has been recommending its shoppers to take a position in fairness or bond securities issued by non-quoted corporations some being owned by a bunch referred to as Cap Vert Energie (“CVE”), specialised in the development, the acquisition and the operation of inexperienced power producers, others being owned by a bunch specialised in lodge companies referred to as Maranatha (“Maranatha”). The CVE securities really useful by AGEO consisted in subscriptions of fairness shares from the rise in capital or bonds, issued by the father or mother company of CVE or by particular objective corporations resulting from function a portfolio of inexperienced power producers, all being denominated “Cap Vert Energie Exploitation” (“CVE”) adopted by a quantity. The investments in fairness shares had been really useful for funding horizons from 5 to eight years and had been assumed to supply a return from 7 to 14.9% per yr, this, due to a assured repurchase worth. The investments in bonds had been proposed for a 1 yr funding horizon and supplied a return from four% to eight%, relying on the precise time period. The Maranatha securities really useful by AGEO included bonds issued by the group’s father or mother company, for a 2 yr funding horizon, and providing a return of 9.5%, and fairness shares of corporations proudly owning straight a lodge resort, some being mixed to an funding in present account services, with a really useful holding time from 5 to eight years, and annual return from 7% to eight%, this, due to the repurchase of fairness shares by Maranatha and the redemption of the present account services. The commissions produced for AGEO by the subscriptions of those securities amounted to three.1 million, representing 30% of complete turnover from its actions in financial advising, of which 19% for CVE and 11% for Maranatha. On Might 30th 2016, the AMF determined to launch an audit on AGEO. The audit involved 15 shoppers who had been really useful by AGEO to subscribe to fairness shares or bonds issued by CVE, and on a pattern of seven shoppers who had been really useful to take a position in each CVE and Maranatha merchandise. Among the many 15 shoppers who had been really useful to take a position in the securities issued by CVE, 9 weren’t offered the doc mandated by the AMF regulation at the start of a enterprise relationship, 11 shoppers weren’t offered any engagement letter, and 13 shoppers weren’t offered a written funding coverage justifying the funding advice. Among the many 7 shoppers who had been really useful to take a position additionally in Maranatha, four weren’t offered any engagement letter, and 6 weren’t offered a report justifying the advice. Three shoppers acquired the engagement letter with a delay. AGEO is alleged of getting omitted to specify in its letters of engagement the sensible circumstances of the compensation acquired from CVE for its services. The settlement between AGEO and CVE included a rising fee in accordance with the amount and delay of distribution of the securities, a gradual fee based mostly on the excellent quantities, and a premium on the amount of the subscriptions above a threshold. The shoppers weren’t knowledgeable of those incentives, though these had been vulnerable to generate a battle of curiosity between AGEO and its prospects. Among the many traders who had been really useful to take a position in Maranatha securities, none had been knowledgeable of the dangers of the merchandise, although Mr Thierry Marchand, the chairman of AGEO had been questioning concerning the financial scenario of Maranatha in July 2015, expressing worries in an e-mail concerning the lack of financial knowledge, and requesting extra info such because the analytical revenue assertion, feedback on the operations of every resort, money move statements, justifying such necessities by the potential burden of some quick time period operations on the treasury of the group dried up by the group’s most up-to-date operation. Regardless of all of this, AGEO moved on recommending its prospects to take a position in Maranatha financial merchandise. The paperwork examined by the AMF didn’t allow auditors to show that AGEO had been making an allowance for the financial scenario of its prospects forward of the funding suggestions. Among the many 15 shoppers who had been really useful to take a position in CVE financial merchandise, no details about their information and expertise of financial investments might be traced. The ranges of revenues and wealth included in a questionnaire had been far too massive to allow AGEO to evaluate their financial scenario. AGEO transmitted to its prospects some advertising paperwork which outlined the anticipated returns and the assured redemption of capital of investments in CVE merchandise. Such paperwork failed to say the funding’s potential dangers, and to tell prospects of the financial weak spot of the company. This was all of the extra damageable, since AGEO was conscious of the weak financials of the CVE group. AGEO argued that CVE was the one liable of the writing of the advertising paperwork whereas it was merely performing as an intermediate, transmitting the paperwork acquired from CVE to its prospects. In such circumstances, AGEO couldn’t be made responsible for the knowledge included in the paperwork. AGEO argued additionally that it had no imply to evaluate the honest worth of the belongings held by CVE and that’s was thus not capable of Question Assignment the knowledge offered by CVE. AGEO finally argued that it took steps in favor of their prospects, by way of the proposals by CVE to repurchase the securities. It added that none of its prospects suffered a loss in capital resulting from their funding in CVE and Maranatha. AGEO failed to offer the financial statements of group CVE to its prospects, and to speak the knowledge in its possession in relation with the rising deficit of CVE from 2012 to 2014, the numerous leverage of the company, and the pledging of receivables from EDF by the company’s collectors. Nonetheless, the financial leverage of the company, its structurally unfavourable internet revenue, had been important info which omission was certainly vulnerable to mislead traders as to the true financial scenario of the company in which they had been really useful to take a position. The identical factor held true for the pledging of the EDF receivables which had been introduced as a assure in all advertising paperwork.
Questions
Question Assignment 1) Did the advertising paperwork distributed by AGEO fulfill the AMF necessities on prospects’ info?
Question Assignment 2) Did AGEO fulfill the AMF necessities on the obligations to investigate concerning the prospects’ information and expertise of financial investments and to contemplate their financial scenario earlier than investing advice?
Question Assignment three) AGEO argues that it couldn’t be made responsible for the content material of the advertising paperwork as they’d been offered by CVE and Maranatha and AGEO was not in a scenario to evaluate the honest worth of their belongings. Can AGEO disguise behind this argument to keep away from a sanction?
Question Assignment four) AGEO argued that none of its prospects suffered a capital loss due to the really useful investments. Can AGEO use this as an argument to keep away from prosecution by the supervisor?
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Case In France, the AGEO agency supplies financial advisor services to finish traders straight or not directly by way of partnerships. From March 214 to Might 2016, AGEO has been recommending its shoppers to take a position in fairness or bond securities issued by non-quoted corporations some being owned by a bunch referred to as Cap Vert Energie (“CVE”), specialised in the development, the acquisition and the operation of inexperienced power producers, others being owned by a bunch specialised in lodge companies referred to as Maranatha (“Maranatha”). The CVE securities really useful by AGEO consisted in subscriptions of fairness shares from the rise in capital or bonds, issued by the father or mother company of CVE or by particular objective corporations resulting from function a portfolio of inexperienced power producers, all being denominated “Cap Vert Energie
