Asset-management divisions of Societe Generale SA were fined a total of 2.5 million euros ($3.4 million) by France’s financial markets regulator for a “disorderly” approach in tackling the 2007-2008 credit crisis and for internal risk-control failures.
Societe Generale Asset Management Alternative Investments, or SGAM AI, was fined 1.5 million euros, the Autorite des Marches Financiers said in a decision posted on its website yesterday. SGAM AI used swaps with another unit, SGAM Banque, to “bypass” investment-funds regulation with “a deliberate will to dissimulate risks to which investors were exposed,” the regulator said. Societe Generale is France’s second-largest bank.
“Societe Generale acknowledges the decision taken against its old asset-management firms,” Elisa O’Neill, a Paris-based spokeswoman, said by telephone today. “These asset-management firms aren’t active any more today.”
SGAM AI’s management of the credit crisis resulted in a 232 million-euro loss in the fourth quarter of 2007 and it also had a 1.9 billion-euro “impact” on Societe Generale’s capital needs, the regulator said. SGAM AI had more than 25 billion euros under management by June 30, 2008, including quantitative asset management, exchange traded funds, active structured management and structured credit management, according to the AMF.
Separately, Societe Generale Asset Management was fined 1 million euros as it failed to maintain an “independent” risk-control department while offloading “illiquid assets” to Societe Generale’s corporate- and investment-banking unit during the 2007-2008 crisis, according to the AMF.