IronFX is now the target of the European Ombudsman, which has given ESMA until the end of March to reach a suitable conclusion on how to deal with the firm. Meanwhile CySec and the national press whitewashes the whole situation. Here are the facts
On February 19 this year, mainstream Cyprus news source 24h.com.cy issued a detailed report which concentrated on the current regulatory (or absence thereof) interest in the activities of notorious FX brokerage IronFX.
The expose, which focused on the company’s large and high profile standing in Cyprus, which has been the source of disdain among Cyprus’ highly well organized FX industry over the past few years, as well as introducing brokers and customers around the world that have continually alleged that the company unlawfully withheld client funds and the withdrawal of such funds across many regions of the world, included a soundbyte interview with CySec Chair Demetra Kalogerou, who has, all the while, appeared powerless to even instruct the suspension of IronFX’s license.
Astonishingly, despite government-level concern that resulted in AKEL party presidential candidate Andros Kyprianou having sent a letter to the EU Parliament and subsequently addressed the continental government regarding his views on IronFX’s business practice, the Cypriot media has interviewed the CySEC, which made some revelations about the Cypriot forex industry and specifically IronFX.
According to the report, most CySEC brokers except IronFx have less than 10,000 clients and all together have approximately 100,000 retail customers, therefore, IronFx is currently, or at least has been by far the largest brokerage by market share in Cyprus, yet is causing the waters to be muddied singlehandedly for the good quality firms that exist in Cyprus.
IronFx must have lost 200,000 clients in early 2015 (in the financial statements 2014 the company reported having 400,000 clients), therefore it is entirely plausible that the firm is insolvent, yet is allowed to continue its business operations. Additionally, the firm owes unpaid taxes to the Cyprus government amounting to over $1.6 million, and is subject to a vast lawsuit from Chinese customers, yet no attempt to seize assets or wind up operations has been made when other firms have been subject to license suspensions for far less heinous infringements.
As far as regulatory apathy is concerned, CySEC received 1700 complaints concerning IronFX in total, but has thus far pretended that most of them were false, double, and produced by an organized campaign. Currently, according to our research, at least 1,512 clients have filed disputes against IronFx with the Cyprus Financial Ombudsman, which is the arbitration body for all matters financial in Cyprus. The Cypriot newspaper reports that 300 cases have been decided, but none of them have been made public information.
This is remarkable as it took place after FinanceFeeds reported the institutional levels of corruption at CySec which provided clear information that demonstrates that the CySec investigation into 1,000 complaints about the missing $176 million in client funds was not conducted by independent body but instead by an IronFX UK lawyer, and that only 20 cases were used as a sample. The conflict of interest renders the entire audit null and void, and our full report can be read by clicking here.
The interesting misinformation wiithin this newspaper report, however, is with regard to the outcome of a court case in Germany in which IronFX took a trader to court. FinanceFeeds can confirm that this has been reported incorrectly, and the correct information is as follows:
IronFx had filed two court cases against this particular retail trader, the first one having been filed on December 3, 2015 which was a few days after the fine of €335,000 had been issued to IronFX, and was a request for a restraining court order. The court rejected this request with the decision of December 22, 2015, and FinanceFeeds has full documented evidence of this.
Secondly, following the rejection, IronFX filed an ordinary civil action against the trader for defamation and damages. This case was terminated on December 14, 2016 with a settlement. The settlement was that the trader must no longer write or publicly report anything at all about IronFx, but that IronFx must pay all proceeding costs including the legal fees of the trader, however until now IronFX has not settled the legal fees even though they were due for payment on February 21, 2017.
Other very important matters that were not covered and not mentioned by CySec in this particular report include action by the European Ombudsman which has issued a decision on a complaint filed by an Hungarian client against the ESMA not taking action against the CySEC.
This decision is not conclusive, but it contributes toward taking the IronFX situation to a public audience. The office of the European Ombudsman is currently working on the issuance of a conclusive decision against the ESMA, if ESMA does not take appropriate measures before the end of March this year.
In addition, the Financial Ombudsman of Cyprus has issued some decisions. The Cypriot newspaper 24h.com.cy reports of 300 decisions against the clients.
It is entirely possible that European clients could file a lawsuit in their home country. Some Hungarian clients are going to do that, and there are also new enforcement possibilities for damaged clients, which are being advocated by certain groups of traders across Central Europe.
As long as the impotence of the regulators across the European Union, including ESMA, and the perceived covering up continues in Cyprus, IronFX will continue to cast its shadow over the genuine and bona fide firms that operate in what has matured to become a comprehensive hub for the entire FX industry, hence it is everybody’s professional responsibility to ensure that these matters are dealt with accordingly.