CySEC imposes whopping €740,000 fine on Cyprus firm

The Cyprus Securities and Exchange Commission (CySEC) on Wednesday announced the imposition of administrative fines totalling €740,000 on the Cyprus Investment Firm (CIF) Exelcius Prime Ltd.

CySEC chairman George Theocharides said that “CIFs are urged to ensure that they fully comply with the provisions of the law and must act within the framework of their operating license”.

“CySEC attributes great importance, among others, to the responsibility that CIFs have in terms of the knowledge and skills of individuals in key positions to ensure the effective operation, supervision and governance of the CIF, as well as the interests of the CIF and its clients,” he added.

According to the commission’s official announcement, this decision follows a series of violations of the Investment Services and Activities and Regulated Markets Law of 2017.

CySEC explained that the fines were levied for several infractions. Firstly, Exelcius Prime Ltd was fined €45,000 for providing investment advice as a regular occupation without it being included in the authorisation granted by CySEC.

Another €60,000 was imposed due to non-compliance with the conditions set out in section 9 of the law, which required adequate board member engagement and a suitable board composition.

The firm, the commission continued, was found to have failed in these areas, as well as in directing its business activity with at least two persons, as mandated.

Moreover, a significant portion of the total fine, €240,000, was for ongoing non-compliance with section 17 of the law concerning organisational requirements.

This included failures to establish adequate policies and procedures, to review the suitability of financial instruments, and to manage outsourcing risks.

Additionally, €120,000 was fined for not adequately addressing conflicts of interest between employees and clients.

Further fines included €110,000 for failing to act in the best interests of clients, €25,000 for not considering the target market of end clients, and €100,000 for misleading client communications.

What is more, CySEC imposed a fine of €20,000 for not assessing investment service appropriateness, as well as a fine of €20,000 for establishing a branch in the Czech Republic without prior CySEC approval.

CySEC stated that the fines were determined by several factors, including the seriousness of the violations and the maximum penalty allowable under the Law.

Furthermore, the regulator emphasised that CIFs must operate within their licensing framework, ensuring effective board supervision, appropriate governance, and adherence to operational policies.

The commission also highlighted the importance of protecting client interests by avoiding conflicts of interest and ensuring that financial products are suitable for the target market.

“CIFs must act fairly, honestly and professionally as a measure to enhance investor confidence in the market,” Theocharides stated.

“A strong commitment of CySEC is the responsible growth of the investment sector, which is based on strict supervision to ensure the protection of investors,” the CySEC chairman concluded.