Belgian police authorities have launched a criminal investigation in Antwerp-based stockbroker Merit Capital, a Belgian press report said on Thursday. The probe is linked to its transactions with H2O Asset Management.
Merit Capital’s future is up in the air after several attempts to find a buyer failed. Luxembourg’s Fuchs & Associés was forced to step back as a possible buyer last month.
Through the Gent-based law firm Lexcom Advocaten, the minority shareholders have hired Alain Hinderyckx, a lawyer specialising in company law, to represent their interests. Hinderyckx did not respond to a request for comment.
A criminal investigation meanwhile is underway around Merit Capital as a result of a civil complaint filed by the company for possible forgery of documents, De Tijd newspaper said on Thursday.
Linked to H2O Asset Management
The Belgian criminal probe reportedly was already launched in November 2020 but has so far remained under the radar. The probe is said to be related to questionable transactions with French-British hedge fund H2O Asset Management, according to De Tijd.
H20 ran into trouble in 2019 after it invested more than one billion euro of its clients’ money in Tenor, a firm managed by German financier Lars Windhorst. The Financial Times has reported that Windhorst’s Tenor recently missed a deadline to pay back this money to H2O. The FT said some 1.6 billion euro is still trapped in so-called “side-pockets” that H2O has set up.
In Antwerp, Merit Capital has been a counterparty to transactions involving H2O, De Tijd said. The firm reportedly has claimed it had not authorised these transactions. Investigators are now probing the authenticity of these documents.
De Backer and Tops want Merit to be dissolved
Meanwhile civil proceedings are ongoing. This week news emerged that there will also be an additional lawsuit filed by two minority shareholders, well-known Antwerp horse doctor Leo De Backer and Dutch horse breeder Jan Tops.
According to De Tijd, they want to ask the Antwerp business court to judicially dissolve Merit Capital and appoint one or more liquidators. This would allow the company to be wound up in an orderly manner.
Merit Capital has reportedly run out of cash and is de facto bankrupt, although to date there has been no formal announcement of a bankruptcy.
Belgian regulators already revoked Merit’s stockbroking license back in April. Legal experts believe that an orderly resolution is now the best option. Meanwhile, the responsibilities of the board of directors were also taken over by the administrators.
Luxembourg’s Fuchs forced to step back
Merit Capital has been trying to find a buyer in recent months. The National Bank did not give a green light for several candidates and appointed two provisional administrators.
During the summer, an approach by Luxembourg-based Fuchs & Associés seemed to provide a solution and breakthrough in the file. An agreement in principle was actually reached between the two parties late July. The agreement however was subject to regulatory approval from Belgium’ National Bank and Luxembourg’s financial regulator CSSF.
In August, Fuchs & Associés withdrew its offer to take over Merit Capital. A person familiar with the discussions said Fuchs was forced to withdraw by Luxembourg’s financial regulator.
So Merit Capital, with some 1.25 billion euro in assets under management and 3,500 clients, is back to the drawing board. One of the provisional administrators indicated in early July that Merit Capital only had funds left for a few weeks. In other words, time is running out.
Related articles on Investment Officer:
- Fuchs drops its interest in Merit Capital (BE)
- Renell Bank silent on Merit Capital’s demise (LU)
- Antwerp asset manager Merit loses brokerage licence (LU)