Therefore we understand that Parliament has limited strictly as qualified investor

The reform of the concept of "qualified investor" by the Decree of May 16, 2006, in application of the law on July 26, 2005 Breton, is perhaps as critical as the introduction of the concept itself.

Qualified investor is born of the Act of 2 July 1998, to avoid heavy and costly obligations attached to the public (EPA), when call considered investors are presumed to have some knowledge of financial matters. Following this Act, and pursuant to article 211-3 of the General regulations of the authority of des marchés financiers (AMF), the establishment of a prospectus under the MFA is not necessary once the operation is out of scope of the EPA. If the qualified investor is thus less protected by the law that the ordinary investor, it is because he enjoys the protection of its expertise. Therefore, we understand that Parliament has limited strictly as qualified investor. However, Decree of May 16, 2006 expanded the list of investors qualified so as to include, according to two different approaches individuals.

Financial skills

First of all, are now qualified investors, individuals seeking their registration on a file held by the AMF and that meet at least two of the three following criteria: detention of a portfolio of financial instruments with a value greater than 500,000 euros, operations of more than 600 euros per operation on financial instruments, at a rate of at least ten per quarter on average over the four previous quartersoccupation for at least one year in the financial sector, of a professional position requiring a knowledge of the investment in financial instruments.

Then and especially, the Decree provides that "investment services providers when they act in an activity of management of portfolio on behalf of their principal" are qualified investors. So, the only remedy to a portfolio management company (SGP) can erect any customer in qualified investor and to refuse the protection afforded to consumers of savings.

Certainly, one can think that customer using a GSP has skills in financial matters than lambda saver. Can also be noted that acting on behalf of UCITS management companies were already deemed qualified investors and that, therefore, the Decree does that align with the quality of qualified investor, the individual management of collective management regime.

A striking dichotomy

However, we cannot ignore that the protection conferred by a UCITS is, thanks, in particular, to legal rules of risk diversification, otherwise more favourable than that which can benefit an investor who, while intervening on the markets through a GSP, saw its portfolio directly exposed to financial risks. In addition, while the eventual loss of a bearer of a UCITS is capped at height of his initial investment, that eventually supported by a client who entrusted its portfolio in mandate under management to a financial intermediary, is not.

In reality, behind the curious wording of this provision of the Decree, which attributes the quality of investor at a GSP acting under a mandate of management, it is the client who will assume the risk inherent in this quality, even if, on the Senate Finance Committee, "it allows to preserve the rights of the clients of these GSP": is there not a surprising between dichotomyon the one hand, the person who will be the quality of qualified investor and, on the other hand, those who bear the risk inherent in this quality

Therefore, one cannot exclude that the provision of the decree appears as too bold in the eyes of the MFA that could respond to mitigate the effects.

While article 322-68 of its general regulations seems already provide sufficient protection to the principal by requiring, inter alia, that the management mandate at least mentions the management objectives and the categories of financial instruments that may include the portfolio.

But the MFA could go further and amending this provision, requiring that GSP clients are offered the possibility to exclude, contractually, the effects of the provision of the decree that places them in a situation of qualified investors. Also, a provision of the terms of reference could, for example, prevent the GSP to invest on behalf of his client in any instrument reserved to qualified investors. Ultimately of a natural person a qualified investor is a perfectly acceptable, so rule it specifically asked and its consequences clearly displayed.