CySec imposed an Administrative Fine of €235.000 on a Cyprus Investment Firm
The Cyprus Securities and Exchange Commission (CySec) has issued an announcement to inform investors that, at its meeting held on January 18, 2016, the Commission decided to impose a total administrative fine of €235.000 to the CIF Ouroboros Derivatives Trading Ltd for non-compliance with the following legislation:
1. the Investment Services and Activities and Regulated Markets Law of 2007, as amended from time to time (‘L.144(Ι)/2007’),
2. the Directive DI 144-2007-01 of 2012 of the Securities and Exchange Commission for the Authorisation and Operating Conditions of CIFs (‘Directive 1’),
3. the Directive DI 144-2007-02 of 2012 of the Securities and Exchange Commission for the professional competence of Investment Firms and the natural persons employed by them (‘Directive 2’)
According to CySec, the administrative fine imposed on the Company is broken down as follows:
Α. €70.000 for non-compliance with Section 6(8) of L.144(Ι)/2007 as it provided the investment service of investment advice, which is not stated in its authorisaton.
Β. €10.000 for non-compliance with Section 28(1) of L.144(Ι)/2007 as it failed to comply at all times with the authorization and operating conditions, as laid down in Section12(4) of L.144(I)/2007, which states that “all members of the board of directors shall commit sufficient time to perform their functions in the CIF”, since the Company’s executive director did not commit sufficient time to perform his duties and did not adequately supervise the Company’s services/activities.
C. €10.000 for non-compliance with Section 28(1) of L.144(Ι)/2007 as it failed to comply at all times with the authorization and operating conditions, as laid down in Section 18(2)(a) of L.144(Ι)/2007 and paragraph 4(1)(f), 13 and 14 of Directive 1. More
specifically:
– The Company did not maintain adequate and orderly records of its marketing communications;
– The Company did not implement and maintain effective and transparent procedures for the reasonable and prompt handling of complaints or grievances received from clients.
– The Company did not keep an up-dated/complete internal operations manual.
D. €20.000 for non-compliance with Section 28(1) of L.144(Ι)/2007 as it failed to comply at all times with the authorization and operating conditions, as laid down in Section 18(2)(d) of L.144(Ι)/2007 and paragraph 16(3) of Directive 1, since, during the outsourcing of its marketing and sales service, it did not take reasonable measures to avoid any unjustified aggravation of the operational risk and not to impair the CySEC’s ability to supervise the Company’s compliance.
E. €40.000 for non-compliance with Section 36(1) of L.144(Ι)/2007 as it failed to act fairly, honestly and professionally in accordance with the best interests of its clients in relation to the terms and conditions for the granting of benefits (trading bonus) and the practices applied in this respect.
F. €30.000 for non-compliance with Section 36(1)(a) of L.144(Ι)/2007 and paragraph 6, subparagraphs (2) and (8) of Directive 2, as the information the Company provided to its clients, amongst others, through its website and the information contained in the advertising material of the Company, were not fair, clear and non-misleading in accordance with Section 36(1)(a) of L.144(Ι)/2007 and the Company did not ensure that these satisfy the terms of paragraph 6, subparagraphs (2) and (8) of Directive 2.
G. €15.000 for non-compliance with Section 36(1)(b) of L.144(Ι)/2007 as the information provided to clients/potential clients on its website at the relevant time, upon entering into the business relationship, were not appropriate so that the clients are reasonably able to understand the nature and risks of the investment service offered and the specific type and the proposed financial instrument, and in accordance with Section 36(1)(b) of L.144(I)/2007 and paragraphs 8-12 of Directive 2.
H. €40.000 for non-compliance with Section 36(1)(d) of L.144(Ι)/2007 and paragraphs 15 and 16 of Directive 2 as, it failed to ask clients to provide the necessary information regarding their knowledge and experience, to assess whether the investment service or financial instrument envisaged is appropriate for them.
Source: CySec – Decision-01-18-2016 for the imposition of administrative fine to Ouroboros Derivatives Trading Ltd
