OptionRally receives CySEC penalty of €138,000, as the CySEC board decided to impose the fine to the the binary options broker. Which rules were violated by OptionRally?
3 October, AtoZForex – The Cyprus Securities and Exchange Commission (CySEC) has informed the investors that it decided to impose a fine of total €138.000 to the Cyprus Investment Firm (CIF) named OptionRally Financial Services Ltd (‘the Company’) for non compliance.
OptionRally receives CySEC penalty of €138,000
To be more specific, the Cypriot regulator issued a fine for the binary options broker OptionRally for non compliance with the following legal framework, according to the official press release by CySEC:
– the Investment Services and Activities and Regulated Markets Law of 2007, as amended from time to time (‘the Law’),
– the Directive DI 144-2007-01 of 2012 of the Securities and Exchange Commission for the Authorisation and Operating Conditions of CIFs (‘Directive 1’),
-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’).
Which legal regulations were breached?
The total penalty sum of €138.000 comprises €3,000 for non-compliance with Section 28(1) of the Law, which includes the following breaches by the CIF, as it is reported by CySEC:
-The Company did not establish, implement and maintain an internal operation manual, which would include all policies, procedures in relation to the approval of marketing material and information addressed to clients or potential clients.
-The Company did not maintain adequate and orderly records of the information relation to the assessment of its marketing material (record of approval of its marketing material).
Moving on, the fine includes €20.000 for non-compliance with Section 28(1) του Νόμου of the Law, as the firm failed to implement appropriate measures to avoid any unfair stress of the operational risk when outsourcing activities.
Another €30.000 are demanded from OptionRally as it has failed to act transparently and honestly in relation to the bonus terms and conditions accepted by their clients and the practices applied to this matter. Additionally, the firm was required to pay another €30.000 for non-compliance with Section 36(1)(a) of the Law and paragraph 6 of Directive 2, as the firm was providing misleading information on their website, on its marketing material and the information provided by the call centers.
Furthermore, as OptionRally receives CySEC penalty, the official press release from the regulator states that the CIF was charged:
€15.000 for non-compliance with Section 36(1)(b) of the Law since the information provided to clients/potential clients on its website, 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
Finally, the remaining €40.000 fine was imposed for non-compliance with Section 36(1)(d) of the Law and paragraphs 15 and 16 of Directive 2, as OptionRally has failed to implement proper communications with their clients.
OptionRally takes corrective measures
AtoZForex has reached out to OptionRally officials for further comments on the case. OptionRally authorities has provided us with the following information:
The Company adopted correctives measures/actions such as, inter alia, the following:
-It has established, implemented and included in its internal operations manual, policies in relation to the marketing material addressed to clients or potential clients.
-it has established a procedure for the review and approval of the Company’s marketing material.
-it has proceeded to take corrective actions for the better supervision of calls conducted at call centers.
-it has taken corrective measures in relation to its marketing material and the information provided to clients or potential clients.
-It has proceeded to amendments in its website in order to comply with the requirements of the Law.
-It has proceeded in updating its questionnaire in relation to the appropriateness of potential clients during the account opening procedure, which has also been included in its internal operations manual.
The firm further highlights that it did not commit a similar violation in the past.
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