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Purpose of the Fund
The purpose of the Investors’ Compensation Fund is to protect
the claims of investors who are covered by the Fund protection
as clients of the investment firms and credit institutions that
are members of the Fund. The extent of this protection is
defined in the Investment Firms Act and the Rules of the Fund.
No claims were made to the Fund in 2010. The Fund’s
obligation to pay compensation is triggered by a member
company’s liquidation, bankruptcy, corporate restructuring or
other similar state of permanent insolvency.
Members of the Fund
Fund membership is compulsory for all Finnish investment firms
and credit institutions who provide investment services and for
all Finnish fund companies authorised to provide investment
services. At the end of 2010, the Fund had a total of 357
members (367 in 2009). Investment firms numbered 51 (52), fund
companies totalled 8 (6) and the rest were credit institutions.
For the purpose of determining fees for the administration of
the Fund, the OP Pohjola Group Central Cooperative is treated as
a single member which represents 213 (220) cooperative banks.
FIM Asset Management Ltd demanded the return of its 2006–2009
contribution payments insofar as they exceeded the amount of
contributions that the company would have been expected to pay,
had it been treated as a so-called old member of the fund.
On 26 May 2010, the Delegation of the Fund decided that the
contribution payments paid by FIM Asset Management Ltd would be
returned for a total amount of €149,065.17. Section 15 of the
Fund’s rules (Determination of the contribution payment) was
ambiguous and open to interpretation in 2006 when the membership
application of FIM Asset Management Ltd was processed. At its
meeting on 15 February 2007, the Board of Directors entered an
interpretation in the record, stating that section 15 also
applies when a new member gains Fund-covered clients from an old
member of the Fund due to a merger, breakup or other business
transfer, and the new member then takes over the operations of
the ceasing member. Under such circumstances, the contribution
payments paid by the old member are transferred to the new
member, who will then be treated as an old member when
contribution payments are determined.
The implementation of this interpretation changed the
determination policy, which has left FIM Asset Management Ltd in
an unequal position compared to more recent members who have
nonetheless gained Fund membership through the same process as
FIM Asset Management Ltd..
Administration of the Fund
Each member of the Fund appoints one member to the Delegation of
the Fund. The Delegation is chaired by Riitta Pyhälä. In 2010,
the Delegation convened once, on 26 May.
The Delegation elects a Board of Directors for the Fund. In
2010, the Board of Directors comprised Seija Koskivaara (until
26 May 2010), Jyrki Manninen (from 26 May 2010), Satu
Nousiainen, Hannele Koskela, Kaj Blomster, Kirsi Lauslahti and
Markku Savikko. Deputy members were Erkki Kontkanen (until 26
May 2010), Helena Laine (from 26 May 2010), Jaana Pohjanheimo (until
26 May 2010) and Jaana Heikkinen (from May 26 2010). The Board
Chairman was Seija Koskivaara (until 26 May 2010), followed by
Satu Nousiainen (from 26 May 2010), and Kaj Blomster was the
Vice Chairman. The Board convened 12 times in 2010.
Authorised public accountant Raija-Leena Hankonen served as the
auditor of the Fund. The position of deputy auditor was held by
authorised public accountant Eija Kauppi-Hakkarainen.
According to the Rules of the Fund, the Board of Directors may
elect a Secretary for the Fund. Pia Hidén served as Secretary
until 31 August 2010, and Johanna Palin thereafter from 31
August 2010. The Vice Secretary until 22 November 2010 was
Mirjami Kajander-Saarikoski, and Jari Virta thereafter.
The Investors’ Compensation Fund has no paid employees, and
board members are not paid any remuneration for attending their
meetings. The Fund has made an agreement with the Federation of
Finnish Financial Services, which states that the Federation
provides the Fund with a Secretary against remuneration.
Capital adequacy
According to the Investment Services Act, the Fund’s assets
shall amount to a minimum of €12 million, out of which at least
€4.2 million is to be covered by cash funds.
At the end of 2010, the Fund’s investments totalled
€5,637,145.95 (€5,538,756.63), measured at market value. These
assets were supplemented by Svenska Handelsbanken’s loan
commitment in the amount of €7.0 million.
Contributions and other charges to members
As the minimum capital requirement of €4.2 million in cash
assets had been exceeded, the Fund needed not add to its assets
by collecting contributions from members in 2010. Contributions
were only charged, in accordance with the Rules, to cover
expenses arising from the loan commitment. In addition to this,
new members who had joined the Fund after the minimum capital
requirement was met (in 2004 or thereafter) were charged a
weighted average contribution. The costs arising from the
administration of the Fund are covered by an administration fee
charged to members. Moreover, new members are charged a joining
fee. The amount collected in contributions in 2010 was
approximately €145,000 (€193,000 the year before), while
administration fees were charged for about €50,000 (€47,000).
The year’s joining fees totalled €8,000 (€14,400).
Investment of the collected funds
In accordance with the Investment Firms Act (922/2007), the
Fund’s assets shall be invested in a safe and efficient way
which ensures the Fund’s liquidity and conforms to the
principles of risk spreading. The Fund’s assets are invested
according to investment guidelines adopted by the Delegation.
At the end of 2010, the Investors’ Compensation Fund had
investments in 8 different funds. The book value of the
investments was €5,173,937.44 on 31 December 2010 (€5,189,734.00
in 2009). The Fund also held other bank deposits for a total
value of €27,195.38.
The Fund’s investments aim for steady profits and low risk. In
2010 the Fund’s investments grew by 0.86% (7.4% in 2008). New
fund investments on fixed-term deposits were made for €100,000.
Performance of the Fund
The amount collected in contributions was added to the assets of
the Compensation Fund. For 2010, the Fund showed a deficit of
€15,636.38 (€10,825.26 surplus in 2009).
The Fund’s operations are subject to income taxation, which
conflicts with the Fund’s purpose of protecting investors’
assets. Taxation affects the investment of the Fund’s assets in
an unwanted way. The Fund has made a proposal to the Ministry of
Finance to free the Fund from income taxation.
Developments after the closing of the financial year and
estimate of future events
No major changes have occurred in the operations of the
Investors’ Compensation Fund after the closing of the financial
year. Presently the Fund is not aware of any cases that could
trigger the Fund’s obligation to compensate investments.
Helsinki, 8 April 2011
Investors’ Compensation Fund
Board of Directors
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