CySEC extends the suspension of Depaho license until November 19

abdelaziz Fathi

The Cyprus Securities and Exchange Commission (CySEC) has decided to extend further the suspension of the license of the Cyprus investment company Depaho Ltd, which operates the retail FX brands GTCM, FXGM and TRADEAPP.

According to the official announcement, the CySEC board took the decision on October 22. The Depaho license was initially suspended on July 9, then the suspension was extended two times, most recently in the beginning of September.

The action was taken as the CySEC suspected the broker of non-compliance with the authorization requirements and gave FXGM parent one month to make adequate arrangements to comply. Apparently, it still hasn’t done so.

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 November 19 to comply with the CySEC provisions and apply to reactivate their license once more.

In the meantime, Depaho cannot conduct business operations, take new clients, accept trading orders, provide other types of investment services, or advertise itself as a CySEC-regulated broker.

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.

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