The Cyprus Securities and Exchange Commission (CySEC) confirmed on Thursday that it has wholly withdrawn the Cyprus Investment Firm (CIF) license AFX Capital Markets Ltd.
According to the CySEC’s statement, the island’s regulator had concluded its formal investigation into the alleged violations of its regulations concerning AFX Capital back in July. As such, the announcement was made several months after the Cypriot broker was ordered to wholly suspend its operations and renounce the CIF authorization.
Additionally, CySEC has slapped AFX Capital Markets’ CEO, its auditors, as well as a number of its officers, with massive fines in excess of €350,000 in connection with breaching their professional requirements and other infringements.
The watchdog ordered AFX Markets CEO Manuela MAZZACCO and board director Andreas Lianos to pay €150,000 in fines. They were also barred from acting in any management capacity relating to the Cypriot financial sector for five and three years, respectively.
The regulator fined and reprimanded AFX Markets’ auditors, BDO Ltd, Anthimos, Leonidou and Partners, in relation to audits of the company’s financial statements between 2014 and 2017. The accounting firms handed €200,000 in collective fines and a severe reprimand by the CySEC as they did not ensure “the correctness, completeness and accuracy” of the reports they submitted.
A long saga
AFX has been ordered by regulators in Cyprus and the UK to cease any activities that would involve releasing client money and securing its books and records for inspection.
Except for the investor compensation schemes in both the UK and Cyprus, there is little to no good news for the clients of both brands, the UK firm and the Cypriot arm of AFX Capital Markets Ltd.
The special administrators of AFX Markets disclosed to the regulators that the company was in terrible financial difficulty and that it had a heavy shortfall in client money of more than £7.3 million.
In addition, CySEC said its probe suggests that there is likely to be a material deficit in client money.
The watchdogs previously identified AFX’s lack of necessary safeguard procedures to protect client assets and raised concerns about its ability to hold sufficient funds in its coffers to settle obligations.
Moreover, AFX’s collapse was expected as it had problems earlier with its UK operations. In 2019, the British watchdog confirmed the appointment of special administrators at the AFX Markets, which was ordered to cease its trading activities after the FCA found serious problems in its operations.
A month earlier, CySEC suspended AFX Capital Markets Ltd, which was fined by the Cypriot regulator in 2017 after they broke another law regarding misleading information. Additionally, this suspension applied to AFX-owned subsidiary STO, which uses the same authorization (DI87-05).
AFX Group was the second-largest European subsidiary of AFX Markets, and according to reports it submitted to the FCA some 1200 client accounts were holding assets worth £7.8 million with the company.