What is the FOGAIN?
The FOGAIN (whose entire legal name is FONDO GENERAL DE GARANTÍA DE INVERSIONES) is the Investors Compensation Scheme for clients of Spanish investment firms and clients of Spanish UCITS Managers (in this latter case, only where a discretionary portfolio management relationship has been established by the investor with the firm).
The FOGAIN has been established to compensate, with the quantitative limits legally established, to those clients of any of the above entities in respect of which the following occurs:
- The relevant firm becomes insolvent.
- As a consecuence of that, the investor is not able to recover the moneys or securities that she/he delivered to - or put at the dispossal of- the investment firm for the provission of an investment service.
The FOGAIN has been legally established as a Fund that is managed by a managing entity called the Gestora del Fondo General de Garantía de Inversiones, S.A. ("Gestora").
All Spanish investment firms, including portofolio managers (Sociedades Gestoras de Carteras), brokers (Agencias de Valores) and broker-dealers (Sociedades de Valores) are mandatory members ("Entidades Adheridas") of the FOGAIN. Becoming a member of the FOGAIN is mandatory for branches in Spain of foreign investment firms incorporated in a non-EU country. Branches in Spain of foreign investment firms incorporated in another EU country may also join the FOGAIN if they decide to do so.
In addition to the above, those Spanish UCITS Managers ("Sociedades Gestoras de Instituciones de Inversión Coleciva") authorised to provide discretionary portfolio management service to individuals, must also join the FOGAIN. In this latter case, only those clients receiving that service will be covered by the FOGAIN. Consequently UCITS portfolios are not covered by the FOGAIN.
The FOGAIN is founded basically with the contributions made on an annual basis by its members. In addition to that, the FOGAIN may arrange credit transactions with commercial banks and with the CNMV in the event it were necessary to attend payment needs.
The FOGAIN is subjec to supervision by the Spanish securities markets regulator (the Comisión Nacional del Mercado de Valores or CNMV).