“Facing Difficulties”: CySEC Investigates CIF That Struggles with Client Funds Returns

Thursday, 03/08/2023 | 11:56 GMT by Damian Chmiel
  • CySEC has licensed Ayers Alliance for nearly a decade.
  • The company's first regulatory problems began in 2022.
Dr. George Theocharides, the Chairman of CySEC
Dr. George Theocharides, the Chairman of CySEC

After the Cypriot financial market regulator took initial action against Ayers Alliance (previously known as Harborx Ltd.) in April 2022, the investment company's problems continued. According to information released by the Cyprus Securities and Exchange Commission (CySEC), an investigation has been launched against the company in connection with a potential violation of the regulations.

Although CySEC did not provide any specifics in the recent call, it did mention that financial penalties could be imposed once the investigation is concluded. In a separate announcement, the regulated company said that they are paying out funds to all customers as best as they can, but they are "facing difficulties."

Cysec Launches Investigation against Ayers

Ayers Alliance Financial Group Ltd (Ayers Alliance) has been licensed by CySEC since 2014. Recently, the company announced that, due to circumstances beyond its "immediate control," it is compelled to cease providing its investment services and voluntarily wishes to relinquish its Cypriot Investment Firm (CIF) license. As part of its licensed services, Ayers offered asset management, structured products, and units in collective investments.

CySEC initiated an investigation that is linked to this renunciation. While awaiting the outcome of this application and CySEC's investigation, the CIF remains under the regulator's supervision, which reminds it of its obligation to continue adhering to applicable laws.

Ayers' CIF License
Ayers' CIF License: Source CySEC

"CySEC notes that Ayers Alliance Financial Group Ltd has appointed Mr. Panos Eliades as Administrator to the Group. Administrators are generally appointed by the Board of Directors of a company to investigate its business and financial affairs. The regulator is not involved in this process," CySEC commented in a statement.

In April 2023, CySEC imposed sanctions on Ayers Alliance for violating regulations concerning safeguarding client assets, precisely depositing clients' financial instruments with a third party. The regulator then ordered the company to cease cooperation with the external firm responsible for maintaining client deposits within six months.

Until 2018, the company operated as Harborx Ltd. but was acquired by Ayers Alliance later that same year (2018) through investment from previous shareholders based in Hong Kong.

Ayers Faces Struggles to Return Investors' Funds

In a recent update, Ayers stated that the company wishes to return all funds to its clients. However, it is "facing difficulties."

After communication with CySEC, the company stated it would not be carrying out any investment activities beyond those strictly necessary for completing the pending transactions or those of its clients. All client funds and assets will be returned to the best of the company's abilities.

"In addition, we are taking legal action against those third parties we consider responsible for the present position and our regulator CySEC is aware of correspondence to that effect," the company commented in a statement about its intention to renounce its license voluntarily.

Source: Ayers
Source: Ayers

The first regulatory action against Ayers Alliance took place in April 2022. At that time, CySEC announced that the company had violated mandatory staffing requirements for its risk management department. The regulator ceased the company from using personnel without the skills, knowledge, and expertise required for the performance of the responsibilities of the Head of the Risk Management Department.

After the Cypriot financial market regulator took initial action against Ayers Alliance (previously known as Harborx Ltd.) in April 2022, the investment company's problems continued. According to information released by the Cyprus Securities and Exchange Commission (CySEC), an investigation has been launched against the company in connection with a potential violation of the regulations.

Although CySEC did not provide any specifics in the recent call, it did mention that financial penalties could be imposed once the investigation is concluded. In a separate announcement, the regulated company said that they are paying out funds to all customers as best as they can, but they are "facing difficulties."

Cysec Launches Investigation against Ayers

Ayers Alliance Financial Group Ltd (Ayers Alliance) has been licensed by CySEC since 2014. Recently, the company announced that, due to circumstances beyond its "immediate control," it is compelled to cease providing its investment services and voluntarily wishes to relinquish its Cypriot Investment Firm (CIF) license. As part of its licensed services, Ayers offered asset management, structured products, and units in collective investments.

CySEC initiated an investigation that is linked to this renunciation. While awaiting the outcome of this application and CySEC's investigation, the CIF remains under the regulator's supervision, which reminds it of its obligation to continue adhering to applicable laws.

Ayers' CIF License
Ayers' CIF License: Source CySEC

"CySEC notes that Ayers Alliance Financial Group Ltd has appointed Mr. Panos Eliades as Administrator to the Group. Administrators are generally appointed by the Board of Directors of a company to investigate its business and financial affairs. The regulator is not involved in this process," CySEC commented in a statement.

In April 2023, CySEC imposed sanctions on Ayers Alliance for violating regulations concerning safeguarding client assets, precisely depositing clients' financial instruments with a third party. The regulator then ordered the company to cease cooperation with the external firm responsible for maintaining client deposits within six months.

Until 2018, the company operated as Harborx Ltd. but was acquired by Ayers Alliance later that same year (2018) through investment from previous shareholders based in Hong Kong.

Ayers Faces Struggles to Return Investors' Funds

In a recent update, Ayers stated that the company wishes to return all funds to its clients. However, it is "facing difficulties."

After communication with CySEC, the company stated it would not be carrying out any investment activities beyond those strictly necessary for completing the pending transactions or those of its clients. All client funds and assets will be returned to the best of the company's abilities.

"In addition, we are taking legal action against those third parties we consider responsible for the present position and our regulator CySEC is aware of correspondence to that effect," the company commented in a statement about its intention to renounce its license voluntarily.

Source: Ayers
Source: Ayers

The first regulatory action against Ayers Alliance took place in April 2022. At that time, CySEC announced that the company had violated mandatory staffing requirements for its risk management department. The regulator ceased the company from using personnel without the skills, knowledge, and expertise required for the performance of the responsibilities of the Head of the Risk Management Department.

About the Author: Damian Chmiel
Damian Chmiel
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Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.

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