LSC News

UAB Invalda turto valdymas sanctioned LTL 50,000 for failure to take actions to avoid the conflict of interests

16/06/2009 | LSC desicions

The LSC established that UAB Invalda turto valdymas had invested assets of the 2nd pillar pension funds and one 3rd pillar pension fund managed thereby into the investment fund under its own management. The net asset value of the fund for a certain period of time failed to reach the statutory amount of LTL 1 m, and accounted for merely about LTL 83,000, therefore upon a failure of the fund to further attract additional investment the fund would have been placed under the liquidation procedure or merger with other funds. The investment of the management company of the assets of the pension funds managed thereby (the amount of the investment accounted for LTL 1.7 m), the fund was in a position to comply with the statutory requirements and was further able to continue its operations.

 

By using the assets of pension funds managed thereby to address the difficulties faced by the investment fund UAB Invalda turto valdymas caused a conflict of interests and failed to take any measures to avoid the conflict. The management company failed to comply with the requirements stipulated in the legal acts to manage assets of pension funds being guided with the best interests of pension fund participants by investing the assets into financial instruments best meeting the strategy of the fund and its risk tolerance profile. The investment fund into which the management company allocated the assets of the pension funds was of rather high risk profile, its portfolio was extremely poorly diversified and characterised by high investment concentration in a small number of companies in Turkey, Romania and Georgia.

 

The LSC also obligated the management company to restore the situation preceding the infringement.