EU securities watchdog ends probe into Luxembourg’s oversight of funds

LONDON (Reuters) – The European Union’s securities watchdog will take no further action following a probe into whether Luxembourg’s financial regulator breached the bloc’s rules in its supervision of a group of investment funds, according to an email seen by Reuters.

The European Securities and Markets Authority (ESMA) last year said it was looking into Luxembourg regulator CSSF’s oversight of a group of funds called LFP I SICAV.

But in a follow-up email dated Dec. 14, 2021, ESMA said it would not launch a full investigation into breach of EU law, based in part on “detailed confidential information from the CSSF, including on its latest supervisory and/or enforcement actions”.

CSSF did not immediately respond to request for comment. ESMA is closed for Easter holidays.

LFP I SICAV is a series of funds that was run by asset manager Luxembourg Fund Partners, several of which have closed.

Hedge fund Columna Commodities Fund – one of the largest funds – collapsed at the end of 2016.

LFP I SICAV’s assets under management (AUM) then totalled nearly 400 million euros ($436.5 million), with the bulk of its investors coming through pension and retirement savings funds.

Its AUM is currently around 20 million euros, according to David Mapley, who is representing individual investors in the funds seeking lost cash.

ESMA’s inquiry followed a complaint by Mapley, seen by Reuters, that the CSSF had failed to uphold the EU’s MIFID II regulations concerning investor protection.

“Investor disbelief and anger continues to mount at this apparent regulatory whitewash,” Mapley said in an emailed statement on Thursday.

ESMA received 196 complaints of alleged breaches of law by national regulators in 2020, but so far none has been upheld.

($1 = 0.9164 euros)

(Reporting by Carolyn Cohn and Huw Jones; Editing by Mike Harrison)