UK Financial Conduct Authority (FCA) barred four Cypriot investment firms from continuing to offer high risk CFDs to UK investors. The companies used unauthorised celebrity endorsements on social media as part of their marketing.
The UK watchdog’s orders require the four firms to stop selling CFDs to UK customers, to close existing positions, to return the money to their UK customers and to notify their clients of the FCA’s action.
Hoch Capital Ltd (trading as iTrader and tradeATF), Magnum FX (Cyprus) Ltd (trading as ET Finance), Rodeler Ltd (trading as 24option) and F1Markets Ltd (trading as Investous, StrattonMarkets and Europrime) used fake endorsements from celebrities on social media and webpages to attract consumers.
In estimations of the FCA, UK investors have lost hundreds of thousands of pounds in the scheme.
The four firms do not have actual presence in the UK and they all have offices in Cyrpus.
FCA’s actions came as a response to insufficient information to the nature of the investments, some of the investors were pressured into making increasingly large investments in CFDs, which referenced bitcoin, foreign exchange, shares and indices. In some cases, investors were even encouraged to take out credit to make the payments.
The firms also failed to pay money owed to investors, charged customers undisclosed fees and failed to tell them about the risks of trading CFDs. Customers of the companies have lost over £100,000 to the schemes.
The Cypriot-regulated firms, which were permitted to operate in the UK through passporting, must now cease all regulated activities with UK consumers.
Mark Steward, FCA Executive Director of Enforcement and Market Oversight, said:
The FCA has removed passporting rights for these firms which effectively stops them from continuing to provide these types of products in the UK. We welcome the further action taken by the CySEC. The FCA’s investigations into the sector are continuing.
Following the FCA’s actions, the Cyprus Securities and Exchange Commission (CySEC) has suspended the regulatory authorisations of Rodeler Ltd and Hoch Capital Ltd and partially suspended the authorisations of Magnum FX (Cyprus) Ltd and F1 Markets Ltd.
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