The Enforcement Committee of French financial market regulator, Autorité des marchés financiers (AMF), has fined and banned France Safe Media (FSM), a tied agent that offered contracts for differences (CFDs) through accounts accessible on an online platform Alvexo.
A Massive Fine and a Ten Year Ban
According to the announcement today (Thursday), the regulator fined the company €300,000 and imposed a ten-year ban from acting as a tied agent and providing reception and transmission of orders (RTO) service. The regulator further fined Lior Mattouk, the Manager of FSM, €100,000 and banned him from managing or directing any entity as a tied agent for ten years.
Tied agents are intermediaries that offer products and services on behalf of a service provider, or, in easier terms, they are affiliates. FSM operated as the tied agent of the Cypriot investment services provider VPR Safe Financial Group Limited.
These enforcement actions of the French regulator were based on five sets of breaches between January 2019 and September 2021 in FSM's RTO business on behalf of third parties.
Serious Breaches by the Company
According to the regulator, the company failed to demonstrate the minimum qualification level and knowledge of its sales staff. Furthermore, there were inadequacies in the questionnaires used by the company to determine clients' knowledge and experience. Also, the scoring system based on the questionnaire was inappropriate.
"It found that account managers interfered with the process of assessing potential clients by asking them to change their answers or to complete the questionnaire again, thereby rendering the questionnaire useless," the AMF stated. "The Commission considered that FSM was, therefore, unable to determine whether its clients or potential clients had the necessary experience and knowledge to understand the risks associated with the products or services offered."
Moreover, FSM did not show the mandatory risk warning in its promotional banners.
"It found shortcomings in FSM's promotional communications for CFDs, noting the absence of an appropriate warning about the risks associated with CFDs in promotional banners and the failure to comply with the prohibition on promoting CFD accounts other than limited risk accounts," the regulator noted.
On top of that, it did not inform the clients of its tied agent nature of business and had failed to exercise due care and diligence in relation to the audit.
The Enforcement Committee of French financial market regulator, Autorité des marchés financiers (AMF), has fined and banned France Safe Media (FSM), a tied agent that offered contracts for differences (CFDs) through accounts accessible on an online platform Alvexo.
A Massive Fine and a Ten Year Ban
According to the announcement today (Thursday), the regulator fined the company €300,000 and imposed a ten-year ban from acting as a tied agent and providing reception and transmission of orders (RTO) service. The regulator further fined Lior Mattouk, the Manager of FSM, €100,000 and banned him from managing or directing any entity as a tied agent for ten years.
Tied agents are intermediaries that offer products and services on behalf of a service provider, or, in easier terms, they are affiliates. FSM operated as the tied agent of the Cypriot investment services provider VPR Safe Financial Group Limited.
These enforcement actions of the French regulator were based on five sets of breaches between January 2019 and September 2021 in FSM's RTO business on behalf of third parties.
Serious Breaches by the Company
According to the regulator, the company failed to demonstrate the minimum qualification level and knowledge of its sales staff. Furthermore, there were inadequacies in the questionnaires used by the company to determine clients' knowledge and experience. Also, the scoring system based on the questionnaire was inappropriate.
"It found that account managers interfered with the process of assessing potential clients by asking them to change their answers or to complete the questionnaire again, thereby rendering the questionnaire useless," the AMF stated. "The Commission considered that FSM was, therefore, unable to determine whether its clients or potential clients had the necessary experience and knowledge to understand the risks associated with the products or services offered."
Moreover, FSM did not show the mandatory risk warning in its promotional banners.
"It found shortcomings in FSM's promotional communications for CFDs, noting the absence of an appropriate warning about the risks associated with CFDs in promotional banners and the failure to comply with the prohibition on promoting CFD accounts other than limited risk accounts," the regulator noted.
On top of that, it did not inform the clients of its tied agent nature of business and had failed to exercise due care and diligence in relation to the audit.
