Investment management company Folksam LO Fond AB has not dealt with the conflicts of interests in its business operations and has had inadequate internal governance and control. The company is therefore being issued a remark and must pay an administrative fine of SEK 6 million.
Folksam LO Fond has for several years had difficulty in identifying and managing conflicts of interest in its business operations. The company has, for instance, shared personnel and functions with other companies in the Folksam group. At the same time, several decisions concerning the investment management company have been made by joint groups and committees within the corporate group and not by the investment management company’s management. The unclear organisation means that the investment management operations have not been sufficiently separate from the rest of the corporate group. This has also made it more difficult for Finansinspektionen to conduct an efficient supervision of the investment management operations.
At the same time, the company has had deficiencies in fundamental internal control functions. The compliance function has not been independent of the operations in the way stipulated by law and the company has had deficiencies in its internal auditing. The company has also lacked appropriate routines and guidelines against money laundering.
As a whole, the deficiencies are serious and Folksam LO Fond is being issued a remark and an administrative fine of SEK 6 million.
The company has planned and begun to implement a number of measures to deal with the deficiencies in its operations.