CySEC suspends the license of the parent company of the FXGM broker
The Cyprus Securities and Exchange Commission (CySEC) suspended the license of the investment company Depaho Ltd – the parent company of the FXGM broker (fxgm.com), which appeared on the KNF’s list of public warnings two years ago.
The main reason for withdrawing Depaho’s license was to provide investment advice without the appropriate qualifications. The same breach was also the cause of the warning issued by the Polish Financial Supervision Authority. In addition, CySEC also provided a whole list of other allegations. The regulator stated that Depaho Ltd and its broker FXGM appear to be having problems:
- with meeting the conditions of the granted license,
- with procedures for preventing conflicts of interest between employees and clients,
- with the provision of services in the best interest of the client and with the honest and professional operation,
- with understanding the offered or advertised financial instruments and their compliance with the client’s interest
- with honest, clear, and not misleading communication with customers and reliable information about the risk and nature of the financial products offered.
In addition, the regulator found that the employees of FXGM who provided information on financial instruments, investments, and other services may not have sufficient knowledge. The level of market understanding and experience was also not verified in relation to customers. Thus, the company did not properly assess the risk that specific investment products might pose for them.
A long history of violations
CySEC also noted that the broker did not provide him with information on corrective actions taken or services provided to Spanish residents. The local regulator (CNMV) is conducting its own investigation in the Depaho case. The company was given two weeks to remedy the infringements indicated by the Cypriot financial supervision. After this period, its license may be withdrawn permanently.
The problems with the FXGM broker and its parent company are nothing new. In September last year, the company had to pay 270 thousand. EUR fine for breach of investment regulations in Cyprus. Two years ago, it was on the list of public warnings of the Polish Financial Supervision Authority.