For implementing plans and procedures to supervise the actions of its Tied Agent in Spain, among other companies, iTrade Global (Cy) Ltd d/b/a InvestFW and TradedWell faced an exceptionally large penalty from the Cyprus Regulator, CySEC. With licence number 298/16, CySEC oversees the CIF. Reporters brought to light iTrade Global’s affiliation with offshore broker Capitalix, a red-listed broker with a Trustpilot fraud rating, a few days ago. According to CySEC, iTrade Global Cy violated several legal and regulatory requirements.
The corporation violated several laws of the 2017 Investment Services and Activities and Regulated Markets Law, which is why CySEC came to this conclusion. iTrade Global Cy Ltd, among other things, neglected to put policies and procedures in place to keep an eye on what it’s Tied Agent in Spain was doing when working on its behalf. Regulated CIFs bear complete and absolute liability for any deed or omission committed by their Tied Agents when operating on their behalf.
CySEC discovered that the company, through its Tied Agent, failed to take the necessary actions to detect, prevent, or manage conflicts of interest, failed to act in a fair, honest, and professional manner when offering clients investment services, and failed to make sure that all information sent to clients was accurate, transparent, and not misleading.
The media has claimed that InvestFW, a broker regulated by the CySEC, is no longer taking on new retail clients, preferring to concentrate on institutional investors. The CIF declared that the TradedWell brand will be shut down.
There is a connection between iTrade Global (CY) Ltd and the offshore broker Capitalix (report here). A director of the company governed by the CySEC is Lee Ron More. In the Seychelles, Lee Ron More is likewise listed as an individual contact for the FSA-regulated 4Square SY Ltd. On the regulatory file there is also iTrade Global’s email address.
CySEC discovered that Itrade Global, through its Tied Agent, had neglected to guarantee that natural persons giving clients information about financial instruments, investment services, or ancillary services had the skills and knowledge required to carry out their legal responsibilities. Additionally, it failed to ask customers for the necessary details about their background and expertise to determine whether the given good or service was suitable for them.
The company’s violations of the law’s provisions governing the product approval procedure, the compliance function, and its duty to maintain conversation logs were also discovered by CySEC in its ruling.
CySEC stated that the Spanish CNMV has provided support.
CySEC
Cyprus’s financial regulator is the Cyprus Securities and Exchange Commission, or CySEC for short. The European MiFID financial harmonisation law is complied with by CySEC’s financial regulations and operations as a member state of the EU.
A sizable portion of foreign retail forex brokers are registered with CySEC. Many binary options brokers had previously chosen CySEC as their regulator of choice before 2018.
As a public corporate organisation, CySEC was established in 2001 under section 5 of the Cyprus Securities and Exchange Commission (Establishment and Responsibilities) Law of 2001. CySEC joined the European MiFID regulation at the same time as Cyprus joined the EU in 2004, providing companies registered there access to all European markets. However, the financial regulatory structure that CySEC enforced for what was once thought to be a tax haven was drastically altered upon the EU’s membership and adoption of the Euro.
CySEC issued a regulatory change on May 4, 2012, pertaining to the categorization of binary options as financial instruments. As a result, platforms for binary options that are based in Cyprus—where the majority of them do—had to be subject to regulation. As a result, CySEC became the first financial regulator in the world to officially acknowledge and control binary options as financial instruments. On July 10, 2019, CySEC permanently prohibited providing binary options trading to retail traders, following the implementation of a temporary ban on the products in July 2018.
ITrade Global Ltd. (As claimed)
More than a million customers worldwide can use Forex and CFD services from top investment company ITrade Global Ltd. Our goal is to give our traders the best possible experience in terms of features, ease of use, tools, training, up-to-date procedures, and prompt assistance. iTrade Global (CY) Ltd., which is licensed and authorised by the Cyprus Securities and Exchange Commission, trades under the moniker TradeFW.
Massive penalty against iTrade Global (CY) Ltd.: $1 million fine assessed by CySEC to broker (In detail)
A Forex and CFD investing firm, iTrade Global (CY) Ltd. is based in Cyprus and is governed and registered with CySEC. INVESTFW, TRADEFW, and TRADEDWELL are some of its registered trading names. The company allows consumers to trade on two online domains: tradedwell.com and investfw.com. It doesn’t seem like the business uses the name TRADEFW.
Having said that, it appears that the corporation is currently suspending operations on both of its domains. According to the trading platform investfw.com, it is no longer taking on new customers. According to information on its website, iTrade Global (CY) Ltd. “is working to modify its business operations to accommodate only institutional investors and to continue offering its services to its existing clients.”
The website of the other trading platform, tradedwell.com, has similarly been rendered inaccessible, accompanied by an announcement that the domain will be expiring shortly. Note that the decision to stop trading TradedWell was made before CySEC’s general punishment against iTrade Global (CY) Ltd.’s operations.
(1.2) Customer feedback on iTrade Global (CY) Ltd.’s platforms
People who have traded on investfw.com or tradedwell.com generally have bad impressions. Unpleasant encounters like aggressive canvassing, deceptive information intentionally given to individuals, and a lack of openness make it challenging to reassure customers.
According to this extremely thorough analysis, InvestFW agents allegedly misled their client in order to profit from his losses. He explains that before recognizing that the positions he was pushed to pursue were losing or generally undesirable, he received coaching for his trading practice.
We are frequently asked to examine brokers’ business practices and other operational procedures as part of our legal practice, especially where those brokers are subject to regulation by the appropriate financial authorities. A similar pattern of forcing platform users to lose so the platform can profit has been experienced by some of the victims we represent. In the European Commission’s Delegated Regulation (EU) 2017/565 on investment firms, there is a clear reference to the independent nature of the offer of financial products and investment advice.
(2) A historic fine imposed by the regulator in Cyprus
(2.1) An extraordinary amount and a decision devoid of an appeal
CySEC said on April 13 that it would fine iTrade Global Ltd. up to $1 million. This amount is extraordinary, and the ruling denounces the corporation in contrast to the regulator’s typical fines. In fact, the foundation of financial agreements between investment businesses and CySEC is typically a concept of “possible deviations,” which gives the broker the benefit of the doubt over any errors.
According to the official announcement, CySEC has chosen to apply a “administrative fine” in this case. Without providing the broker with a chance to refute the accusations, the regulator created a list of seven primary areas on which to criticise the broker.
Wind-Up- The CySEC’s decision is summarized as follows:
- iTrade Global (CY) Ltd. was fined € 240,000 for failing to modify its user policy in accordance with the law and for failing to take the required steps to monitor its customers and maintain an archive of their correspondence.
- iTrade Global (CY) Ltd. was fined €120,000 for neglecting to recognize and resolve conflicts of interest with its affiliated agents.
- iTrade Global (CY) Ltd., which is liable for the actions of its linked agent, was fined €130,000 for failing to act in the best interests of its investment clients.
- iTrade Global (CY) Ltd. and the linked agent it oversees were fined €110,000 for their lack of openness in the services provided by the platforms they operate on and in their customer solicitation.
- iTrade Global (CY) Ltd’s linked agent was fined € 80,000 for failing to furnish the clients it canvassed with concrete details about the company’s services and business plan.
- iTrade Global (CY) Ltd. faces a fine of € 80,000 for intentionally choosing individuals with less trading experience and neglecting to warn them about the hazardous nature of their business activities.
- A fine of € 240,000 was imposed on iTrade Global (CY) Ltd for its failure to exercise supervisory responsibility over the actions of its linked agent.
(2.2) The ramifications and outcomes of that choice
The Cypriot regulator does not typically impose such severe penalties on the investment firms under its purview. Several data studies released by CySEC indicate that the total administrative fines assessed in 2022 will come to a total of $2.9 million. The penalty assessed on April 13, 2023 against iTrade Global (CY) Ltd appears to be remarkable in its quantity; it accounts for over one-third of all fines imposed in 2022.
It is known that iTrade Global (CY) Ltd has delegated part of its activities to a third party, the so-called tied agent. However, it is very difficult to find any information about this tied agent. There are reports that it is a third party operating on Spanish territory, but on the CNMV website (Spanish financial authority), no information is available in the ‘agents’ sub-section.
One wonders if regulated brokers would alter their operations to provide their customers with trading that is more transparent and equitable in light of the upheaval that iTrade Global (CY) Ltd is going through and the recent firmness of the European regulator.
