CySEC Extends CIF License Suspension of FXGM Parent
The Cyprus Securities and Exchange Commission (CySEC) today announced that it has continued the suspension of Depaho Ltd, which operates the retail FX brands GTCM, FXGM and TRADEAPP.
Back in July, Depaho was initially flagged for non-compliance and had its license temporarily suspended by CySEC following several allegations of multiple violations.
CySEC now extends the punitive measures as the firm was still accused of acting contrary to investors’ interests, and more broadly the regular operation of capital markets. Depaho has until the end of September 2021 to comply with the CySEC provisions and apply to reactivate their license once more.
In particular, Depaho is accused of providing investment advice without obtaining prior authorisation to do so. The company also appears to have problem with its organizational requirements alongside lapses in implementing its conflicts of interest policy.
Citing the Article 25(1) of the law, CySEC’s statement further reads that Depaho didn’t act “honestly, fairly and professionally when providing investment services to clients, in accordance with the best interests of its clients.” By extension, the regulator alleges that the company doesn’t understand the financial instruments it offers nor assesses the compatibility of these products to clients.
The CySEC also raised concerns over Depaho’s marketing practices as its clients were not able able to understand the nature and risks of certain financial instrument the company recommends. Further, the broker was accused outsourcing its marketing activities to third parties and at times was misrepresenting the qualifications of its personnel to prospective clients.
Depaho Ltd is operating through its brand name FXGM and domain names www.depaho.com; www.fxgm.com; www.gtcm.com; www.tradeapp.com. Back in 2013, the company purchased the brand name FXGM and the domain name www.fxgm.com from FX Global Markets (FXGM), which in turn renounced its licence in the same year.
Depaho is obliged to take action within the specified deadline to comply with the necessary provisions then apply to reactivate its license once more. But while the license suspension is in force, the company is not permitted to enter into a business relationship with any person, accept any new customer, or provide any services.
In addition, Depaho must, if existing clients so wish, close any open positions about clients’ contracts (on time or earlier if the client wishes so). It will also be required to return to existing clients all of their funds and profits earned if the clients want to do so.
In the meantime, the company has to upload notices regarding the suspension of its license onto all of its sites, which in this case, has yet to take effect.