(Bloomberg) -- H2O Asset Management and its former owner, a unit of Natixis SA, are among firms targeted in a French lawsuit seeking €717 million ($785 million) over losses stemming from a scandal over illiquid investments at the fund boutique. 

A group of investors said on Wednesday they filed the lawsuit at a Paris court against H2O and several of its subsidiaries, as well as Natixis Investment Managers, the former majority owner of the firm. The group, which includes more than 6,000 professional and individual investors, also target KPMG over its involvement as an auditor and Credit Agricole SA’s CACEIS as the custodian.

“We believe the claims are without merit, and we will contest them vigorously,” a spokesman for Natixis Investment Managers said by email. Spokespeople for KPMG and Credit Agricole declined to comment, while H2O didn’t immediately reply to a request for comment.

The lawsuit is the latest from the scandal at Natixis’ former investment boutique H2O, which erupted in 2019 when investments in illiquid securities linked to controversial German financier Lars Windhorst left some clients unable to get their money back. France’s markets regulator Autorité des Marchés Financiers fined H2O a record €75 million this year and the UK’s Financial Conduct Authority is also investigating. 

Natixis, which had owned a majority stake in H2O, scaled back its holding in 2022.

Reports about the illiquid investments triggered an investor flight at the time, prompting French regulators to order H2O to freeze some of its hard-to-sell funds. H2O segregated the Windhorst-linked notes and placed them in vehicles known as side pockets. Several of those, initially valued at around €1.6 billion, have seen their value decline drastically over time, with some down 85%. 

Read more: H2O’s Latest Markdowns Leave Some Windhorst Sidepockets Down 85%

(Updates with detail on investor group in second paragraph.)

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