Retail investors of defunct forex firm to be compensated

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Retail investors who saw their money go up in smoke are to be compensated several years after a Limassol forex firm was sanctioned by the Cyprus Securities and Exchange Commission.

Retail investors who lost their money placed with now-defunct PFX Financial Professionals will be able to claim part of their cash, some three and a half years after the Limassol-based retail forex broker’s license was suspended by the regulator.

According to a source close to the Cyprus Securities and Exchange Commission, duped investors can claim up to €20,000 each from the compensation fund.

The CEO was slapped with a hefty fine of €350,000 and a 10-year ban on trading, and another senior director with a three-year ban from the sector for “negligence and non-compliance” with investment rules.

There was no mention whether the CEO and director of the firm were charged with defrauding their investors whether they took the money and ran or if it was simply a case of non-compliance with trading regulations.

In the past, several forex brokers facing financial trouble or poor placement of clients’ funds, have allowed for their license to lapse and accepted slap-on-the-wrist fines.

The first notice against PFX was in November 2016, when CySEC issued an initial suspension, pending clarification from the forex trader, in October 2018 the company was forced out of business.

Last week, CySEC issued its final punishment, saying it was banning CEO Evgenios Martinides and its executive director Yaroslav Martynenko from the financial services sector over their omission and negligence during their time in office.

CySEC’s withdrawal of the company’s license is a result of the investigation into PFX which found that its non-compliance with the Investment Services and Activities and Regulated Markets Law of 2007 was due to the “fault, willful omission and negligence” of the company’s executive directors.

Specifically, it was found that breaches in compliance included inadequately addressing concerns with the conduct of business obligations when providing investment services to clients and failing to properly submit financial accounts and other information required by CySEC in a complete and accurate manner.

The parent company, FX Financial Professionals Ltd, operated the retail forex broker FXFINPRO at website fxfinpro.com, while the company also operated the portfolio management company FINPRO Investments at finproinvest.com.

In a statement, CySEC chair Demetra Kalogirou said: “There is no place in Cyprus for individuals who wish to conduct business without adhering to the rules and regulations in place to protect investors and uphold the standards of a robust financial market.”

A source close to CySEC said that the board wanted to send out a harsh message to forex or other companies that they cannot get away with negligence and non-compliance with the market’s rules.