CESR publiceert rapport

CESR publiceert onderzoek naar mogelijke misstanden in Europese beleggingsfondsenindustrie

CESR publishes the results of investigations of mis-practises in the European investment fund industry

CESR publishes today the results of a report (Ref. CESR/04-407) which sets out the findings of CESR members following their investigations into the possibility of abusive mis-practises such as, late trading or market timing practices in the European investment fund industry.

On publishing the report CESRs Expert Group Chairman, Lamberto Cardia noted "The report finds that abusive business practises which exploit the mutual funds for the benefit of some privileged investors (such as late trading or market timing) are rare in Europe. Nevertheless, the findings of the investigation also suggest that improvements should be made to internal processes of management companies and they must rise to the challenge. Supervisors will certainly be focusing in on this aspect looking ahead to ensure high level of investor protection in the European investment funds."

CESR members conducted extensive investigations to assess whether mis-practices were prevalent in Europe's investment fund industry, following the US regulatory authorities findings in autumn 2003, in which they found evidence of abusive practices in the US mutual fund market. The conclusion that there is little evidence of these practices occurring in Europe, is encouraging, however, this should not lead to complacency. Indeed, a key finding of the investigation was that internal processes of the management companies should be improved as this may be a source of potential weakness in the future which could lead to cases of mis-practices developing.

Therefore, whilst the findings of CESR members suggested these abusive practises of late trading or the abusive use of 'market timing' have not been common in Europe, CESR members have nevertheless chosen to take a proactive stance to try to hinder these types of mis-practises emerging in the future on the basis of this investigation, by tackling this question of internal controls as well as reviewing other measures.

In particular, CESR members have taken action to develop supervisory programmes and tools to increase their monitoring of potential cases of mis-practises, such as developing programmes geared to identifying samples of transactions to review, which may indicate potential signs of late trading and market timing. Secondly, CESR members have initiated regulatory changes or, in some cases where appropriate, amended processes to reform the functioning of the collective investment
management activity to avoid the possibilities of mis-practises. Such changes include requirements concerning the internal control mechanisms of fund management companies, and the way in which forward pricing and fair value approaches are used in the valuation of assets of investment funds. A summary of the actions taken by each CESR member following the findings of the investigation are included in the annex of the report.

For further information please contact:
CESR Fabrice Demarigny Or Victoria Powell
Secretary General of CESR Communications Officer
Tel : +33 (0)1.58 36 43 21
Fax: +33 (0)1.58 36 43 30
Email: secretariat@cesr-eu.org
Web site: www.cesr-eu.org