Mutual funds that failed to attract 70,000 euro investments or 500 investors and fund management companies whose share capital is not worth at least 35,000 euros. That is what the National Securities Commission (CNVM) found when checking compliance with the regulation on the operation of mutual funds and management companies.
CNVM at the end of last week decided to suspend the operations of two investment management companies and of no less than six mutual funds. The representatives of some of the management companies on the market say they will find it harder and harder to keep going over the years to come, because, in addition to the lack of investor trust in mutual funds, the most powerful Romanian banks, BRD and BCR have entered this market in the last couple of years.
The two management companies suspended by CNVM are Institutul Roman de Investitii si Administrare Fonduri (Romanian Investment and Fund Management Institute - IRIAF), held over 70% by Razvan Paunescu, son of businessman George Constantin Paunescu, and Spor SA, controlled by businessman Ovidiu Tender. The two have less than 35,000 euros in capital, which is against the Commission regulations. IRIAF manages Fondul Mutual Petrolier Roman (Romanian Mutual Oil Fund) and Spor manages ARDAF fund. Tender also controls the ARDAF insurer, which established Spor.
The two funds are to be transferred to new administrators, though ARDAF will need to merge with an already existing fund due to its 2bn ROL (50,000 euros) net asset, below CNVM's specifications.
Active Dinamic and Plus Fidelity funds were suspended in their turn for failure to meet the minimal net asset requirements. The purchase and repurchase of fund shares were suspended, except those cases when investors want to redeem all their shares and the Commission demanded the management company to comply with the legal provisions.
"Giving up investment management is out of the question. The merger of the two funds or the takeover of two more funds are now being debated, so that the merger will see Active Dinamic and Plus Fidelity meeting the legal requirements," said Sorin Constantin, the representative of Active Management, the company managing the two funds.
Active Dinamic was after all established by the merger of three other funds managed by Active Management. The National Securities Commission is currently looking for management companies for three funds: Armonia, Fondul Mutual Petrolier Roman and ARDAF.
Another two funds suspended by CNVM are Stabilo and Allegro, managed by Quadrant Asset Management. The suspension, effective in two weeks, was actually requested by Quadrant to allow for the merger of two funds. vlad.nicolaescu@zf.ro
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