CySec imposed an Administrative Fine of €138.000 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 June 06, 2016, the Commission decided to impose a total administrative fine of €138.000 to the CIF B.O. Tradefinancials 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’)

The administrative fine imposed on the Company is broken down as follows:

Α. €3.000 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) and 14 of Directive 1 for not implement adequate policies and procedures sufficient to ensure its compliance with its obligations according the L.144(Ι)/2007 and Directive 1 neither included these policies and procedures on its internal operation regulation. More specifically:

– The Procedures Manual the company has prepare and apply regarding the information provided to its clients/potential clients does not include the procedures the company follows in practice.

– The Procedures Manual the company has prepared and apply regarding the compatibility examination include procedures in part which were incomplete and not according the procedures the company follows in practice.

– It was not possible to provide access for CySec in archives the company keeps regarding the information for the client (including the marketing communications) and the information provided to the client in order to examine how sufficient and organised these are.

Β. €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(I)/2007, and in Paragraph 16(3) of Directive 1, for not taking the reasonable steps to avoid undue additional operational risk, when relying on a third party for the performance of investment services or activities or operational functions.

C. €30.000 for non-compliance with Section 36(1) of L.144(Ι)/2007 as it failed to act honestly, fairly and professionally in accordance with the best interests of its clients in relation with the provision of of trading benefits.

D. €30.000 for non-compliance with Section 36(1)(a) of L.144(Ι)/2007 and paragraph 6, subparagraph (1), (2) and (8) of Directiive 2, as the information on its website, the information that were addressed to its clients through their online account and the information from its marketing communications were not fair, clear and not misleading according to the section 36(1)(a) of L.144(Ι)/2007 and the company has not ensure that these information fulfill the requirements of the paragraph 6, subparagraph (2) and (8) of Directiive 2, according the paragraph 6(1) of Directive 2.

E. €15.000 for non-compliance with Section 36(1)(b) of L.144(Ι)/2007 as the information provided to potential clients 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. Specially, the information that the company provided to potential clients upon entering into the business relationship were not appropriate and completed

F. €40.000 for non-compliance with Section 36(1)(d) of L.144(Ι)/2007 and paragraphs 15 and 16 of Directive 2, as the company fail to receive from clients/potential clients the necessary information regarding his knowledge and experience in the investment field relevant to the specific type of product or service offered or demanded so as to be able to assess whether the investment service or product envisaged is appropriate for the client. Furthermore, the outcome of the process the company used to follow to evaluate the compatibility was to set the type of products or service as compatibly for all clients and not providing the necessary warning for not compatible type of product or service.

You can read the CySec’s announcement (In Greek only) at: Administrative fine announcement B-O-Tradefinancials July 08

Source: CySec

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