CySEC Slaps €50K Fine on Licensed Firm for Investor Protection Lapses

CySEC Slaps €50K Fine on Licensed Firm for Investor Protection Lapses

Time Stamp: March 12, 2024 5:18 AM
Source Node: 2512242

The Cyprus
Securities and Exchange Commission (CySEC) has imposed a total administrative
fine of €50,000 on Fiduserve Asset Management Ltd, the investment fund manager
licensed in Cyprus.

The
regulator’s decision cited multiple violations of the Investment Services and
Activities and Regulated Markets Law by the company.

The largest
portion of the fine, amounting to €20,000, was levied for Fiduserve’s failure
to obtain necessary information about investors’ financial situations,
investment objectives, and risk tolerance levels during the period from June
2018 to October 2021. This breaches the part of the regulation that requires
investment firms to recommend suitable financial instruments aligned with
clients’ profiles and risk appetites.

Furthermore,
CySEC imposed a €15,000 penalty for failing to provide periodic statements with
the required content to investors whose portfolios allowed leveraged management
between December 2018 and October 2021. Additionally, Fiduserve neglected to
inform investors when their portfolio values decreased more than 10% on
several occasions from September 2019 to December 2020.

A €5,000
fine was issued for not sending updated statements to investors regarding how
their investments corresponded to their preferences, objectives, and
characteristics during the same period.

Finally,
CySEC fined Fiduserve €10,000 for providing investors with inaccurate, unclear, and
misleading information.

In arriving
at the €50,000 total administrative fine, CySEC carefully considered several
factors that underscored the gravity of Fiduserve’s violations. However, the
company’s cooperation during the investigation and its clean record were also
factored into the final penalty amount.

CySEC Imposes Second Major
Fine of the Year

The €50,000
fine imposed on Fiduserve Asset Management Ltd marks the second significant
penalty handed out by the regulator in 2024.

Earlier
this year, in February, CySEC settled with Fintailor Investments Ltd, requiring
the firm to pay €200,000 for potential breaches of anti-money laundering
regulations. In the latter part of 2023, CySEC took enforcement actions
against several other investment firms.

In
December, the regulator settled with Naga Markets Europe Ltd, a Cyprus-licensed
company that is part of the publicly listed NAGA Group in Germany, for
€150,000. The settlement addressed various regulatory violations that occurred
between January 2021 and April 2022.

Also, in
December 2023, CySEC imposed a €50,000 monetary penalty on Begin Capital
Markets for “possible violations” of local regulations. This was not
the first time the regulator had taken action against the company, highlighting
its ongoing efforts to maintain compliance within the industry.

In addition
to imposing fines and reaching settlements with investment firms, CySEC has proactively
issued warnings to protect investors from unauthorized entities. In late
February 2024, the regulator added 10 new websites to its list of unauthorized
service providers.

The Cyprus
Securities and Exchange Commission (CySEC) has imposed a total administrative
fine of €50,000 on Fiduserve Asset Management Ltd, the investment fund manager
licensed in Cyprus.

The
regulator’s decision cited multiple violations of the Investment Services and
Activities and Regulated Markets Law by the company.

The largest
portion of the fine, amounting to €20,000, was levied for Fiduserve’s failure
to obtain necessary information about investors’ financial situations,
investment objectives, and risk tolerance levels during the period from June
2018 to October 2021. This breaches the part of the regulation that requires
investment firms to recommend suitable financial instruments aligned with
clients’ profiles and risk appetites.

Furthermore,
CySEC imposed a €15,000 penalty for failing to provide periodic statements with
the required content to investors whose portfolios allowed leveraged management
between December 2018 and October 2021. Additionally, Fiduserve neglected to
inform investors when their portfolio values decreased more than 10% on
several occasions from September 2019 to December 2020.

A €5,000
fine was issued for not sending updated statements to investors regarding how
their investments corresponded to their preferences, objectives, and
characteristics during the same period.

Finally,
CySEC fined Fiduserve €10,000 for providing investors with inaccurate, unclear, and
misleading information.

In arriving
at the €50,000 total administrative fine, CySEC carefully considered several
factors that underscored the gravity of Fiduserve’s violations. However, the
company’s cooperation during the investigation and its clean record were also
factored into the final penalty amount.

CySEC Imposes Second Major
Fine of the Year

The €50,000
fine imposed on Fiduserve Asset Management Ltd marks the second significant
penalty handed out by the regulator in 2024.

Earlier
this year, in February, CySEC settled with Fintailor Investments Ltd, requiring
the firm to pay €200,000 for potential breaches of anti-money laundering
regulations. In the latter part of 2023, CySEC took enforcement actions
against several other investment firms.

In
December, the regulator settled with Naga Markets Europe Ltd, a Cyprus-licensed
company that is part of the publicly listed NAGA Group in Germany, for
€150,000. The settlement addressed various regulatory violations that occurred
between January 2021 and April 2022.

Also, in
December 2023, CySEC imposed a €50,000 monetary penalty on Begin Capital
Markets for “possible violations” of local regulations. This was not
the first time the regulator had taken action against the company, highlighting
its ongoing efforts to maintain compliance within the industry.

In addition
to imposing fines and reaching settlements with investment firms, CySEC has proactively
issued warnings to protect investors from unauthorized entities. In late
February 2024, the regulator added 10 new websites to its list of unauthorized
service providers.

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