IronFX, a provider of FX trading services, has been accused of operating and promoting its products without proper authorization in Colombia, raising allegations from the Financial Supervisory Authority of Columbia (SFC), via an SFC manifest.
Cyprus-based IronFX is a global trading firm, specializing in FX, commodities, CFDs and other financial instruments. Given its operational latitude, the company is regulated by numerous international bodies, namely the Cyprus Securities and Exchange Commission (CySEC ) – moreover, offices set up across Europe, Asia and Latin America, IronFX provides FX services for a variety of these clients.
Latin American Expansion Stonewalled in Colombia
However, IronFX’s recent initiative to expand into Colombia has been met with substantial roadblocks as of late. The SFC, Colombia’s paramount governmental watchdog organization for the overseeing and Regulation of securities, stocks and other financial instruments, has recently found evidence of wrongful misconduct by IronFX, specifically in regards to requiring prior authorization to operate in the country. Indeed, Colombian law dictates that if a foreign institution lacks a representative office or a contract correspondent they must refrain from acts of promotion or advertising their services and hire people.
The SFC is alleging that IronFX did not adhere to this mandate and that it has received knowledge of individuals operating in Colombia acting as domestic promoters for a variety of products and services of IronFX. In response, IronFX had previously contacted attorneys, ultimately denying that the office was functioning with enough evidence that would justify such allegations - IronFX has indeed applied for authorization since 2013.
According to an SFC report, “It was found that since June 2013 IronFX had recruited one office manager and six account managers in Colombia. In addition, the individuals were hired directly by IronFX, whom ultimately verified their acceptance of the respective jobs, provided a basic salary to the individuals, and even allotted commission-based incentives for opening new accounts in the country.” It was also alleged that these Colombians operating as account managers by IronFX had routinely held demonstrations and delivered documents and credentials of their hiring by the firm in attempts to carry out adverting initiatives.
Temporarily Suspended Activities Though No Fines to Be Given
IronFX made an application back in 2013 with the regulator in Colombia for the provision of relevant services and it is currently under examination. Nevertheless, during a visit of the regulator to the IronFX office, the officers instructed IronFX to cease any kind of activities, even though the office was during its setup phase. As soon as IronFX confirms that such activity has ceased the appointed attorneys will confirm it to the regulator, who will start re-examining IronFX’s application on obtaining the relevant license in Colombia - there were no fines given.
Colombia represents an interesting case in Latin America, effectively operating as a beacon of regulation in a region that has been largely lax on this issue. IronFX’s recent brush with the regulator SFC underscores a commitment by Colombia to operate in a fully transparent trading atmosphere across FX and other asset classes.
