Cypriot regulator CySEC revokes LCG Cyprus’ CIF license

The CySEC confirmed it will maintain supervision over the Cypriot arm of London Capital Group ‎‎(LCG) until it has taken care of its responsibilities under the expired license.

LCG’s CIF approval was revoked because the company hadn’t appointed at least “two persons who meet the requirements” to operate its brokerage business in Cyprus. The regulator further explained that the firm “did not establish adequate policies and procedures to ensure its compliance, including the compliance of its managers and employees, with its obligations under the Law, as it did not ensure that its compliance officer, who is responsible for the compliance function and for any reporting as to compliance.”

Based on the information at the disposal of the CySEC and in order to protect the interests of the investors from being further compromised, the license of LCG Cyprus has been wholly withdrawn.

Earlier in August, the CySEC fined the brain-child of Charles Henri Sabet €40,000 due to shortcomings in the company’s internal controls.

Accurate details of the settlement have not yet been made public at the time, but the violations were reportedly related to the general principals of the article 16(2) of Regulation (EU) 596/2014. This article addresses investment firms that operate a trading venue to establish arrangements, systems and procedures aimed at preventing and detecting market manipulation and insider trading.

The CySEC statement confirmed this meaning, adding that the deficiencies cited in its order against the company concern market abuse “as further specified “in Articles 2 and 3(8) of the Delegated Regulation (EU) 2016/957 supplementing Regulation (EU) 596/2014.”

The watchdog also said that the company “does not maintain effective arrangements and procedures to detect and report suspicious orders and transactions, which also ensure the monitoring those.”

In deciding the disciplinary action, the authority considered it needed to send a clear deterrent message about LCG’s lapses and highlight weaknesses in supervision systems covering the staff’s handling of trading activities.

Under the Cypriot regulatory framework, LCG must return all outstanding balances to its clients and handle all of their complaints. In addition, the company must provide a confirmation from its external auditor that it does not have any pending obligations and must include details of each of the company’s clients, according to the same CySEC announcement.

The regulator often gives the broker three months from that date to settle its obligations arising from the investment services that also lapsed, during which time it remains under the Cypriot watchdog’s supervision.

After several months of pause, the Cypriot regulator is once again flexing its muscles and actively finding compliance irregularities. Moreover, CySEC has suspended several forex brokers that were caught up in promoting their risky products in the UK.