SWEDEN – The Swedish Financial Supervisory Authority Finansinspektionen today issued a warning to the SEK5.8bn (€616m) fund management firm Erik Penser Fonder relating to two of its guaranteed funds, which could affect pension fund investors.

The manager is accused of failing to adequately formalise in writing an outsourcing agreement - involving two of its 14 funds - with its sister fund management arm, Erik Penser Fondkommission.

It is also accused of “deliberately mis-valuing” one of the funds by roughly 4%, said a SFSA spokesperson. The two funds are valued at approximately SEK200m each.

Both the SFSA and Erik Penser Fonder confirmed that some pension funds had invested in the funds concerned.

“Basically, it Erik Penser_Fonder didn’t manage to have an organisation to handle a conflict of interests with its sister company, and in one instance mis-valued one of the funds,” said the SFSA spokesperson.

Commenting on the warning, Erik Penser Fonder board member Hans Boberg told IPE: “We have certainly taken the warning on board, and have made a series of corrections and adjustments within the company in order to see to it that the things the Swedish regulator criticized will never happen again.

“All of it is the board and the company’s responsibility, so it’s not one person that has made a mistake. It was done in the best interests of the rest of the owners in the fund at that time. But still, the valuation was wrong.”

According to Boberg, a decision has been taken to close down the two funds, which could take up to two months.

According to Swedish legislation, Erik Penser Fonder must hand the funds over to its custodian for temporary management. The custodian – in this instance Skandinaviska Enskilda Banken – will then decide whether to liquidate the funds or find another manager.

“In practice, I believe those funds will be closed down,” said Boberg.

The SFSA told IPE that if the funds were closed, unit holders would get their money back.

“Their assets are secured,” said the SFSA spokesperson.

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