Fogain: the tool that supports investors in insolvencies

In June 2001, the Spanish National Securities and Exchange Commission (CNMV) took over Gescartera, a company whose accounts were too unreliable. These doubts were confirmed when shortly afterwards it had to declare a suspension of payments. This case, which became one of the biggest financial scandals in the history of Spain, left thousands of people affected, many of them small savers. And it raised questions about how to compensate those who lost their money after entrusting it to this company.

The incident served as the impetus for the creation of the General Investment Guarantee Fund later that same year, which would protect investors in this and any similar cases in the future. Since 2001, Fogain has handled eight crisis cases, compensating more than 15,000 investors for a total of more than 90 million euros.

How does it work and what cases does it handle?

The Fogain, which operates similarly to the Deposit Guarantee Fund, covers the clients of securities companies, brokerage agencies, and asset management companies that provide investment services to individual clients, a list that was expanded last year to include financial advisory firms. For all of these companies, membership in the Fund is mandatory. The current list of companies covered by Fogain comes to 339.

In the event that one of these companies becomes insolvent or is declared insolvent by the CNMV, its clients are entitled to compensation of up to a maximum of 100,000 euros. This amount has also been increased since the Fogain was founded, in response to the needs arising from such situations.

It’s important to note that Fogain's coverage is only activated in these two cases: company bankruptcy or insolvency. It doesn’t cover losses in asset value, which is an inherent risk of investing. Cases of insolvency of the issuer are also excluded, so the CNMV recommends that potential investors stay informed of their situation.

Fogain's main source of funding is the annual contributions of its member companies, which is calculated on the basis of criteria such as the number of clients and the capital deposited. It also receives financial income from investing its assets, and in order to ensure its ability to pay indemnities, it may take loans from financial institutions or the CNMV itself.

MAPFRE’s chairmanship

On Wednesday, Fogain's Board of Directors approved MAPFRE Inversión, MAPFRE's securities company, to assume the chairmanship. This task will be carried out by Jaime Álvarez de las Asturias, Manager of MAPFRE's Securities Market and Corporate Governance Legal Department and a member of Fogain's Board of Directors since 2018. He will replace José Ignacio García-Junceda, Chairman of Renta 4, the securities firm that has held the position since the fund's creation in 2001.

“I’m proud to take on this role to represent MAPFRE Inversión. We believe this fund plays a very important role in protecting our country's investors," said Álvarez de las Asturias before assuming his new position at the head of Fogain's Board of Directors.