Case The AGEO company offers financial advisor services in France either directly to end investors or indirectly through partnerships. From March 214 to May 2016, AGEO has been recommending its clients to invest in equity or bond securities issued by non-quoted companies some being owned by a group called Cap Vert Energie (“CVE”), specialized in the construction, the acquisition and the operation of green energy producers, others being owned by a group specialized in hotel businesses called Maranatha (“Maranatha”). The CVE securities recommended by AGEO consisted in subscriptions of equity shares from the increase in capital or bonds, issued by the parent company of CVE or by special purpose companies due to operate a portfolio of green energy producers, all being denominated “Cap Vert Energie Exploitation” (“CVE”) followed by a number. The investments in equity shares were recommended for investment horizons from 5 to 8 years and were assumed to offer a return from 7 to 14.9% per year, this, thanks to a guaranteed repurchase price. The investments in bonds were proposed for a 1 year investment horizon and offered a return from 4% to 8%, depending on the exact term. The Maranatha securities recommended by AGEO included bonds issued by the group’s parent company, for a 2 year investment horizon, and offering a return of 9.5%, and equity shares of companies owning directly a hotel resort, some being combined to an investment in current account facilities, with a recommended holding time from 5 to 8 years, and annual return from 7% to 8%, this, thanks to the repurchase of equity shares by Maranatha and the redemption of the current account facilities. The commissions produced for AGEO by the subscriptions of these securities amounted to 3.1 million, representing 30% of total turnover from its activities in financial advising, of which 19% for CVE and 11% for Maranatha. On May 30th 2016, the AMF decided to launch an audit on AGEO. The audit concerned 15 clients who had been recommended by AGEO to subscribe to equity shares or bonds issued by CVE, and on a sample of 7 clients who had been recommended to invest in both CVE and Maranatha products. Among the 15 clients who had been recommended to invest in the securities issued by CVE, 9 were not provided the document mandated by the AMF regulation at the beginning of a business relationship, 11 clients were not provided any engagement letter, and 13 clients were not provided a written investment policy justifying the investment recommendation. Among the 7 clients who had been recommended to invest also in Maranatha, 4 were not provided any engagement letter, and 6 were not provided a report justifying the recommendation. Three clients received the engagement letter with a delay. AGEO is alleged of having omitted to specify in its letters of engagement the practical conditions of the compensation received from CVE for its services. The agreement between AGEO and CVE included a growing commission according to the volume and delay of distribution of the securities, a gradual commission based on the outstanding amounts, and a premium on the volume of the subscriptions above a threshold. The clients were not informed of these incentives, although these were susceptible to generate a conflict of interest between AGEO and its customers. Among the investors who had been recommended to invest in Maranatha securities, none had been informed of the risks of the products, even though Mr Thierry Marchand, the chairman of AGEO had been wondering about the financial situation of Maranatha in July 2015, expressing worries in an e-mail about the lack of financial data, and requesting additional information such as the analytical income statement, comments on the operations of each resort, cash flow statements, justifying such requirements by the potential burden of some short term operations on the treasury of the group dried up by the group’s most recent operation. Despite all of this, AGEO moved on recommending its customers to invest in Maranatha financial products. The documents examined by the AMF did not enable auditors to prove that AGEO had been taking into consideration the financial situation of its customers ahead of the investment recommendations. Among the 15 clients who had been recommended to invest in CVE financial products, no information about their knowledge and experience of financial investments could be traced. The ranges of revenues and wealth included in a questionnaire were far too large to enable AGEO to assess their financial situation. AGEO transmitted to its customers some marketing documents which outlined the expected returns and the guaranteed redemption of capital of investments in CVE products. Such documents failed to mention the investment’s potential risks, and to inform customers of the financial weakness of the company. This was all the more damageable, since AGEO was aware of the weak financials of the CVE group. AGEO argued that CVE was the one liable of the writing of the marketing documents while it was merely acting as an intermediate, transmitting the documents received from CVE to its customers. In such circumstances, AGEO could not be made liable for the information included in the documents. AGEO argued also that it had no mean to assess the fair value of the assets held by CVE and that is was thus not able to question the information provided by CVE. AGEO eventually argued that it took steps in favor of their customers, through the proposals by CVE to repurchase the securities. It added that none of its customers suffered a loss in capital due to their investment in CVE and Maranatha. AGEO failed to provide the financial statements of group CVE to its customers, and to communicate the information in its possession in relation with the growing deficit of CVE from 2012 to 2014, the significant leverage of the company, and the pledging of receivables from EDF by the company’s creditors. However, the financial leverage of the company, its structurally negative net income, were significant information which omission was indeed susceptible to mislead investors as to the true financial situation of the company in which they were recommended to invest. The same thing held true for the pledging of the EDF receivables which were presented as a guarantee in all marketing documents.