The Cyprus Securities and Exchange Commission (CySEC) has taken away the Investment Firm (CIF) licenses of Magnum FX Ltd (trading as ET Finance) and Inveza Capital Ltd (ex NFX Capital CY Ltd).
Earlier in August, Magnum FX agreed to pay €150,000 to resolve charges that it violated the Cypriot investment laws.
At the time, the Cypriot watchdogs provided a breakdown and specific details for the regulatory action, saying its decision was taken based on possible violations of local regulations and for not acting honestly when approaching their potential clients. The brand was also flagged for non-compliance with authorization conditions stated in many articles, which mainly concern the appropriateness of their products offered to certain client segments.
In particular, Magnum FX was fined for conducting business or facilitating some activities not stated in its authorisation. Cypriot CIFs need to notify CySEC when they are providing their services in third countries. Before they can deliver their product in a given country, they need to get appropriate authorisation from the country’s regulatory authorities first.
Magnum FX was among a handful of Cypriot brokers that the UK’s FCA suspended their passporting rights. At the time, the British watchdog also barred the UK counterparts of Hoch Capital Ltd (trading as iTrader and tradeATF) and Rodeler Ltd (trading as 24option), amongst others.
The City regulator said these firms failed to pay money owed to investors and charged customers undisclosed fees whilst failing to disclose the risks of trading CFDs. The CySEC has also suspended several forex brokers that were caught up in promoting their risky products in the UK.
The FCA said some of these brokers used a variety of inappropriate techniques, including misleading financial promotions which appeared to offer consumers the opportunity to purchase real stocks while, in fact, they were merely trading CFDs.
Other brands used pressure tactics, described by one customer as ‘relentless’, to encourage them to invest ever increasing sums of money. Some customers were even encouraged to declare they were professional investors despite not meeting the necessary criteria for such categorisation.
CySEC ordered the companies to take corrective measures within a set framework, otherwise additional measures will be taken such as the imposition of new fines, or suspension and/or even the withdrawal of their licenses.