The Cyprus Securities and Exchange Commission (CySEC) today announced that the authorisation of the Cyprus Investment Firm Depaho Ltd, the parent company of retail FX broker FXGM, is suspended in whole.
The regulator explains that there are suspicions of Depaho’s alleged violations of:
- Article 5(1) of The Investment Services and Activities and Regulated Markets Law of 2017 (‘the Law’) as the Company appears to provide the investment service of investment advice, as a regular occupation, without the granting of prior authorisation by the CySEC.
- Article 22(1) of the Law as the Company does not appear to comply at all times with the conditions for authorisation established in articles 17(2) and (6) of the Law, regarding the organisational requirements.
- Article 24(1) of the Law as the Company does not appear to take all reasonable steps to identify and to prevent or manage conflicts of interest between itself, including its managers, employees and tied agents, or any person directly or indirectly linked to it by control, and its clients.
- Article 25(1) of the Law as the Company does not appear to act honestly, fairly and professionally when providing investment services to clients, in accordance with the best interests of its clients.
- Article 25(2)(b) of the Law as the Company does not appear to understand the financial instruments it offers or recommends, nor to assess the compatibility of the financial instruments with the needs of the clients to whom it provides investment services and does not seem to ensure that financial instruments are offered or recommended only when this is in the interest of the client.
- Article 25(3)(a) of the Law as the Company does not appear to provide information, including marketing communications, to its clients or potential clients that is fair, clear and not misleading.
- Article 25(4)(a) of the Law as the Company does not appear to provide appropriate information to clients or potential clients in good time.
- Article 25(5) of the Law as the Company does not appear to provide the information referred to in article 25(4) of the Law, in a comprehensible form, so that clients are reasonably able to understand the nature and risks of the investment service and of the specific type of financial instrument that is being offered and, consequently, to take investment decisions on an informed basis.
- Article 26(1) of the Law as the Company does not appear to ensure that natural persons giving information about financial instruments, investments or ancillary services, to clients on behalf of the Company, possess the necessary knowledge and competence to fulfil their obligations under articles 25 and 26 of the Law.
- Article 26(3)(a) of the Law as the Company, when providing investment services other than those referred to in article 26(2), does not appear to ask the client to provide information regarding that person’s knowledge and experience, so as to enable the Company to assess whether the investment service or product envisaged is appropriate for the client.
- Article 36(10) of the Law as the Company does not appear to have given to the CySEC written notice of the change in the information relevant to its branch in Spain.
- Article 42 of Regulation (EU) no. 600/2014 as the Company does not appear to comply with paragraphs 4(1)(d) and (5) of Directive DI87-05.
CySEC notes that Depaho does not appear to have provided adequate information regarding the corrective measures taken and/or has not taken adequate corrective measures for the purposes of the settlement reached with CySEC, as well as the results of the investigation performed by the supervisory authority of Spain Comision Nacional del Mercado de Valores (‘CNMV’) at the company’s branch in Spain, regarding the company’s operation in that market, as the aforementioned alleged violations cause concern and risk relating to the protection of the Company’s clients and/or constitute a threat to the orderly operation and integrity of the market.
Within two weeks, Depaho must take the necessary actions in order to comply with the aforementioned provisions.
The company is allowed to:
- Complete all its own transactions and those of its clients which are before it, in accordance with client instructions.
- Return all funds and financial instruments which are attributable to its clients.