The central bank has fined a unit of Mercer €117,600 for failing to share key details about the mutual funds it manages.
Regulators sanctioned Mercer Global Investments Management Ltd (MGIM), which is responsible for issuing prospectuses and key investor information documents on Mercer’s behalf, for failing to disclose that certain funds relied on index tracking or which index was tracked.
The failure meant that regulators were not fully aware of the strategies and risks associated with the funds – key factors in allowing funds to be listed and marketed to investors.
The breach and fine, while minor, are significant as Mercer is a large outsourced wealth manager managing hundreds of millions in pension assets on behalf of many Irish employers.
“Transparency regarding a fund’s investment policy or strategy is a critical element of investor protection,” said Seána Cunningham, the central bank’s director of enforcement.
“This investigation found that MGIM failed to meet its obligations to both investors and the Central Bank by failing to include required index replication strategy information in the prospectuses and KIIDs of five investment funds managed by MGIM.”
The breaches occurred over a seven-year period from 2011 to 2018 and were discovered by the central bank as part of a thematic review of the funds sector.
The administrative fine was reduced by 30 percent in line with the central bank’s accounting procedures, which encourage companies to cooperate with investigations, indicating MGIM has accepted the central bank’s findings.
The so-called UCITS regulations for funds require certain information to be included in fund documentation to help investors make informed decisions about their investments.
The Central Bank examines prospectuses and key investor information to ensure they comply with regulations before they are admitted for listing or distribution. However, officials rely on information provided by fund management companies such as MGIM to be accurate and up-to-date, the central bank said.
“One of the key features of any sound regulatory regime is ensuring that companies and their products meet the appropriate standards to enter the financial services industry in the first place,” said Ms. Cunningham.
“Efficient central bank gatekeeping relies on accurate and complete information submitted by firms seeking fund approval as part of the assessment of their applications and in ongoing oversight.”
https://www.independent.ie/business/irish/central-bank-fines-mercer-unit-for-inaccurate-fund-details-42149295.html Central bank fines Mercer entity for inaccurate fund details