Reporting on CySEC decisions to impose fines on binary brokers and other related firms is turning into a habit for all those writing about this particular industry. One could claim that this is normal, as it reflects the fact that a lot of this type of companies have concentrated in Cyprus and as regulation becomes more effective and the local regulator toughens its control an increasing number of firms get busted for not fully complying with the regulations and get penalized for it.
However, at times it seems that the fines announced by CySEC are a case of “too little, too late.” But let us justify this criticism by referring to an announcement made today by CySEC, regarding a fine on ChargeXP Investments Ltd, which is a popular payment service provider in the binary options industry, usually preferred by brokers using the SpotOption platforms.
In this announcement, which for the time being is only available in the Greek language on the CySEC website, the Commission informs investors that it decided to impose an administrative fine on ChargeXP Investments Ltd, during a meeting of the CySEC board on 21 October 2013! Immediately then two valid questions come to mind, why is CySEC publicizing this kind of decisions in the Greek language only, especially since most investors and other people affected by this type of information are not Greek-speaking? And why on earth did CySEC wait for almost two months after deciding to impose the fine to actually announce it to the public?
Another criticism we have is the actual amount of the fine imposed, which is a mere fraction of the amount that could have been imposed according to the legal provisions. Indeed, the fine was only 10.000 Euro compared to the maximum amount of 350.000 Euro that could have been imposed. We believe that this criticism gains more validity if we take a closer look at the particulars of this case. The fine was imposed for an infringement of Article 41 of the 2009 Law Regulating the Structure, Responsibilities, Powers, Organisation of the Securities and Exchange Commission and other Related Issues, which reads as follows: “A person who in the course of providing information for any of the purposes of this Law or the relevant legislation makes a false, misleading or deceitful statement as to any fact thereof or conceals a fact or fails to submit facts or in any way impedes the immediate collection of information or the immediate carrying out of inspection or entry or investigation of the Commission, shall commit a criminal offence and shall be subject to a penalty of imprisonment not exceeding five years or to a fine up to one hundred and seventy thousand euro or to both penalties: Provided that a person acting in the way referred to in this section shall be assumed to be acting knowingly.”
Obviously breaching this part of the law is considered as a serious offence. According to the CySEC statement during February and March 2013 ChargeXP provided false and/or misleading statements and concealed or omitted to submit required information to the Commission.
Although CySEC says that ensuring the validity of the information given to the Commission is of paramount importance for the effective exercise of its regulatory competences and although it points out that its ability to protect investors is hindered when the particular section of the law is breached, it could be argued that the height of the fine imposed and the severe delays in taking and then announcing the decision (if we consider that the fine is announced almost a year after the breaching of the law took place) do not reflect the gravity the regulator claims to be attaching to such offences.
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.