FUND 3.9.2R makes the AIFM responsible for the proper valuation of the fund's assets, the calculation of net asset value and its publication. An administrator that struck the wrong price has not acquired the obligation by performing the task. COLL 6.6.3R(1) requires the scheme to be managed in accordance with the instrument constituting the fund, the applicable rules and the most recently published prospectus, so an incorrect unit price breaches COLL 6.3.
Rectification is immediate, with no grace period. Former unitholders are named, so an investor who redeemed at the wrong price and left the register is inside the obligation, and money can travel in either direction.
Materiality and the depositary's judgement
The judgement belongs to the depositary. A manager that concludes an error was immaterial and files the conclusion has taken a view the rule does not give it. COLL 6.6.4R(2) requires the depositary to take reasonable care on a continuing basis that pricing procedures are appropriate and that records sufficient to show compliance with COLL 6.3 have been kept.
Nothing in COLL supplies a percentage of net asset value below which an error is de minimis; the only qualifier is minimal significance, applied by the depositary on the facts. An internal threshold makes escalation predictable but binds nobody else. What a pricing error policy can settle: which control detects; how fast the depositary is told, in hours not reporting cycles; who assembles the population of affected deals, over what period; and who signs the compensation calculation.
Correction outside COLL
COLL does not reach an unauthorised AIF. FUND 3.9.13G points to articles 67 to 74 of the level 2 regulation, which the Handbook does not reproduce; on the account carried through this library's legacy materials, article 72 requires formal procedures for correcting an incorrect net asset value and compensating investors harmed by it.
Currency
Articles 67 to 74 were not read at source. Read and date the current text before drafting a correction procedure against article 72.
Everything else comes from the fund documents and the administration agreement. Two questions should be settled before an error occurs: whether the fund can recover an overpayment from an investor already redeemed out, which most closed-ended structures cannot; and who bears the shortfall where recovery is impossible, which silence leaves with the remaining investors. FUND 3.11.25R(2) requires the depositary to ensure units or shares are valued in accordance with national law, the instrument constituting the fund and FUND 3.9.
The correction file
The control that caught it, and the date, separated from the date the error occurred. The gap is a control finding of its own.
The population. Every deal executed at the incorrect price, with the investors identified, including those who have left.
The depositary's view, in writing, on whether the breach was of minimal significance, and its date.
The compensation calculation, its method, and who checked it independently of whoever produced the price.
The cause, stated as a control failure rather than an event. A stale price accepted by a tolerance check set too wide is a different finding from one nothing was looking for.
What changed. COLL 6.6.6R(1)(b) requires records letting the manager demonstrate at any time that compliance has been achieved, kept six years. A repeat inside that window with no change recorded after the first turns a pricing failure into a systems and controls one.