Why did CySEC fine Falcon Brokers executives €195,000?


Why did CySEC fine Falcon Brokers executives €195,000? Why did the regulator also ban the directors from any financial activity? We look into details of the case.

10 July, AtoZForex The Cyprus Securities and Exchange Commission (CySEC) has made the big announcement today. Notably, the Cypriot watchdog has concluded the investigation into Falcon Brokers Limited’s business. As a result of its investigation, the CySEC has issued a €195,000 fine for the executives of the brokerage.

However, that is not all – the Cypriot regulator also has called for a ban on all of the personnel in the group from any financially related activity.

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Falcon Brokers CySEC license

Today’s CySEC move concludes a series of actions against Falcon Broker Limited. Initially, the CySEC has suspended the license of Falcon Brokers back in September 2015. Relating back to the license suspension of Falcon Brokers, CySEC has based this action on the discovery of the broker not being compliant with the regulator’s legal requirement for client funds. Specifically, it depicts a violation of CySEC’s Investment Services & Activities and Regulated Markets Law of 2007.

Afterward, the Cypriot regulator has extended the suspension of the license two times. The first extension of license suspension came into force as of 2nd November 2015. Moreover, Falcon Brokers’ license suspension license remained suspended, following a decision from the regulators on the 26th of October. 2015. This is due to the fact that the broker still did not satisfy the requirements of the regulator. That time, the CySEC ruled out the following restrictions in relation to Falcon Brokers:

1. Cannot provide/perform any investment services/activities, pursuant to section 26(5) of the Law.

2. Must, if existing clients so wish, without being considered in violation of section 26(5) of the Law,:

– Close all open positions in relation to clients’ contracts, or of its own, on their maturity date or on an earlier date if the client so wishes.

– Return to existing clients all of their funds and profits earned.

Following the first extension of the suspension, CySEC has prolonged the suspension one more time in December 2015. Finally, in April 2016, the CySEC has disclosed the board’s decision of Falcon Brokers license withdrawal.

Why did CySEC fine Falcon Brokers executives €195,000?

Today’s CySEC announcement stands out as one of the strictest measures against Falcon Brokers. As CySEC fines Falcon Brokers executives €195,000, this puts an end to the Falcon Brokers’ CySEC story. Additionally, the official announcement from CySEC states:

A collective sum of €195,000 has been imposed on the Company’s:

• Sole shareholder, executive director and senior manager, Mr. Mohammed Yahya Amin Al Ansari;

• Executive director and senior manager, Mr. Marwan El Daouk;

• Independent non-executive director, Mr. Khalid Ahmad Emran Abdo;

• Independent non-executive director, Mr. Wael Ata Elayyan Jaber

Specifically, the individuals have failed to have and follow the proper operational requirements to safeguard clients' funds from use in the Company's own account, according to CySEC. In fact, the failure to protect investor money is a very serious violation of the law. Particularly, the CySEC reports that all of the directors failed to evaluate and review the effectiveness of the policies and procedures to address any deficiencies.

In addition, the CySEC has banned Mr. Ansari from participation in any professional financial activity for 5 years. Also, the same measures have been applied to Mr. Abdo and Mr. Jaber, each of them is banned from engaging in the financial activity for 2 years.

Demetra Kalogerou on Falcon Brokers CySEC fine

Additionally, the Chairwoman of CySEC, Demetra Kalogerou, has commented:

“The senior managers of Falcon Brokers Limited wholly neglected their duties to ensure the Company had the correct measures in place to protect investors, which resulted in serious failings to safeguard client funds.

Having limited investor detriment through the suspension and withdrawal of the Company’s license in 2015 and 2016, imposing multiple fines on key persons and banning three directors from regulated activities concludes CySEC’s eighteen-month investigation.

As is consistently stated, CySEC will not hesitate to pursue regulatory action against current or former directors should they or their licensed company be found to be in violation of the legislation we consistently enforce.”

The official announcement of CySEC can be found here.

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