Recently, the media provided an update on Leverate Financial Services Ltd. (“Leverate”), a company under CySEC regulation and holding licence number 160/11 (refer to the report here). As a whistleblower kindly pointed out, it appears that we were lacking some information at this point. For instance, the FXVC (www.fxvc.eu) brand of Finteractive Ltd., another CySEC-regulated CIF with licence number 238/14, is allegedly connected to the beneficial proprietors of Leverate. Similarly, we were not aware of Belgrade’s boiler rooms or any other unregulated brands. Here is the most recent information.
Leverate has partnered with the German traditional football team Herta Berlin in order to sell its FXPN (www.fxpn.eu) brand in Europe through football sponsorship. Finteractive and FXVC made a wager on a collaboration with Leeds United, a team in the English Premier League.
But it’s clear that both brands share more than simply their marketing approaches and sports partnerships. The boiler chambers of the infamous Parogan DO in Belgrade will look after the FXVC and FXPN brands. This is the location where the Opteck scam, another one of the Leverate Group’s unregulated scams, was formerly handled. Parogan is the biggest boiler room operator in Serbia and has maintained numerous broker scams.
Furthermore, we discovered that the illicit brokers Astontrust, Marketscube, GlobalMarkets (also known as Glob-Markets), BudsFX, or Tradixa appear to be a part of the vast network of unlicensed Leverate white-label brokers run by the boiler rooms of the Comunico88 DOO (www.communico88.rs) and Global-Tech DOO. While some of these illicit brokers, such as Marketscube, have already disappeared, others, such as AstonTrust and GlobalMarkets, are still in operation. Like Sirix, they make use of the Leverate infrastructure.
We discovered that Tirana is home to Leverate’s Balkan headquarters.
Claims Made by FXVC
Forex, commodities, equities, indices, and cryptocurrencies can all be traded on FXVC. Users can trade, purchase, and sell a variety of assets with it. To help brokers, it offers economic information, news updates, trading tools, and analyst reviews. For brokers, it offers a cooperation program.
Retail investors throughout the world can benefit from FXVC’s commitment to excellence in delivering a trading platform that can be used with some guidance from our client relationship agents. The FXVC team is very knowledgeable and available to traders around-the-clock.
Without the hefty fees connected with boutique firms, FXCC wishes to offer our clients personalised attention. FXCC has assembled a group of customer service representatives and client relationship agents who deal directly with customers.
FXVC takes extremely seriously our obligation to safeguard your payments and information. In our endeavours to combat identity theft and money laundering, we implement the Know Your Customer (KYC) protocols set forth by regulatory bodies. For deposits and withdrawals, as well as the safeguarding of all personal information, we employ the same degree of security as the banking sector. Lastly, in order to keep all of our clients’ assets secure and separated, we collaborate with reputable credit and banking institutions as well as financial services organisations.
Unregistered Broker Dealer Activity: What was Ran Strauss Involved in?
When a business uses individuals who aren’t registered as broker-dealers to raise money from investors in a private securities offering and they represent themselves as investment bankers, consultants, advisers, and/or finders, that is often the first sign of unregistered broker-dealer activity. These individuals must be connected to a registered broker dealer business and registered as brokers with the SEC and Financial Industry Regulatory Authority (“FINRA”) in order to regularly recruit investors or get transaction-based pay.
What Does the Unregistered Broker Dealer Activity Test Entail?
A. The requirements for broker registration are extensive and contingent upon the specific facts and situations. Unregistered broker dealer activity is primarily determined by whether the individual (i) actively sought out investors, (ii) counselled investors regarding the viability of the investment, (iii) prepared investment documentation, (iv) engages in securities transactions on a regular basis, and (v) received transaction-based compensation or commissions.
Are There Any Requirements Other Than Broker Dealer Registration Exempt?
Brokers are often not companies that sell securities for their own account. In a similar vein, they are not dealers since they do not conduct regular business by selling securities for their own account.
For those connected to an issuer who take part in the sale of the issuer’s securities, such as executives and staff of the issuer, a corporate general partner of an issuer limited partnership, or a corporation connected to the issuer, SEC Rule 3a4-1 offers a safe harbour. According to 3a4-1, these individuals will not be considered brokers if they meet the following criteria: (i) they do not receive commissions or other transaction-based compensation based on securities transactions; (ii) they are not connected to a broker-dealer; and (iii) they restrict their sales activities to one of the following: (a) one offering per year while performing other significant duties for the issuer; (b) they can only solicit certain financial institutions; or (c) passive or clerical tasks that do not involve finding investors for the issuer’s offering.
Four Benefits of Getting a Forex Broker License Over Regulated vs. Non-Licensed Brokers
When preparing for the future of your brokerage, a forex broker licence should be taken into account, regardless of whether you intend to launch your own brokerage or are already conducting business in an unregulated manner.
Regulations in the currency sector were significantly less stringent ten years ago than they are today. For this reason, starting a new forex broker from scratch without a licence is more difficult than it formerly was. Check out these 4 reasons to think about submitting an application for a forex broker licence if you’re intending to start a new forex brokerage or if you’re already operating without a licence:
1. Forex Broker License Provide Access to Better Banking Choices The process of opening a bank account without a forex broker licence is getting more and harder. Even while we can provide unlicensed brokerages with a number of alternatives, they are getting harder to come by and have less choices. Establishing a direct banking relationship is one of the main benefits of applying for a forex broker licence.
2. Working with Reputable PSPs Is Nearly Hard Without a Forex Broker License – As with the previous argument, it is nearly hard to acquire PSP solutions these days without a licence. Even more difficult is the fact that unregulated brokers must exercise caution while using the limited PSP options that are still accessible to them. Many of these firms are unregulated themselves and have a reputation for freezing payments or disappearing with client deposits.
3. A Fantastic Launchpad to Premier License Areas We frequently talk to business owners who want to open their own brokerage but need to first get an FCA licence in Cyprus or the UK. We are happy to help in either area, however we first recommend that you look at a jurisdiction like Labuan, Malaysia, which issues licences more rapidly. It’s crucial to remember that obtaining a forex broker licence in Europe requires a significant time and financial commitment.
It is recommended that you apply for a licence in a location where they are granted relatively quickly—for instance, within three to four months. This licence will not only let you launch your firm in a few months instead of a year, but it may also be used as a springboard for future licensing in Europe or other regions.
4. Having a licence gives your brokerage more credibility. A great method for your broker to differentiate themselves from the competition is to promote the areas where your company is licensed. This will enhance your company’s reputation and encourage institutions and high net worth investors to think about trading with your brokerage.
Ran Strauss and Guy Paz: Conclusion
To avoid regulatory action, companies that use workers or other unregistered individuals to acquire cash need to exercise caution and regularly monitor their operations. Any kind of action falls under this category, including call centres, email solicitations, hard mailers, etc. The use of general solicitation and wide advertising in Rule 506(c) offerings to authorised investors under the JOBS Act is expected to result in more regulatory action.
