CySEC reaches settlement with AFX Capital Markets over possible law violations
The settlement reached with the CIF over the possible violations is for the amount of €50,000.
The Cyprus Securities and Exchange Commission (CySEC) has today published a notice on its website informing of a settlement reached with AFX Capital Markets Ltd for possible violations of The Investment Services and Activities and Regulated Markets Law of 2007.
In particular, the investigation for which the settlement was reached, involved assessing the Company’s compliance with section 28(1) of L. 144(Ι)/2007, according to which a Cyprus Investment Firm (CIF) must, at all times, comply with the conditions under which the authorisation was granted as laid down in Part III of L. 144(Ι)/2007 and, more specifically, with the conditions laid down in sections 18(2)(d) and 18(2)(g).
Under section 18 (2) of the Law, a CIF must:
(d) ensure, when relying on a third party for the performance of investment services or activities or operational functions which are critical for the provision of continuous and satisfactory service to clients and the performance of investment activities on a continuous and satisfactory basis, that it takes reasonable steps to avoid undue additional operational risk. Outsourcing of the above must not be undertaken in such a way as to materially impair the quality of its internal control and the ability of the Commission to monitor the CIF’s compliance with all its obligations;
- (g) arrange for records to be kept of all services provided and transactions undertaken by it, which shall be sufficient to enable the Commission to monitor compliance with the requirements under this Law, the directives issued pursuant to this Law and the Regulation (EC) No 1287/2006, and in particular to ascertain that the CIF has complied with all its obligations with respect to clients or potential clients.
The settlement reached between CySEC and AFX is for the amount of €50,000. The company is said to have paid this amount.
In the meantime, the adversary proceedings against AFX Capital Markets Ltd., STO Super Trading Online (STO) and AFX Capital U.S. Corp. continue at the New York Eastern Bankruptcy Court, with the defendants accused of wiping out the remaining balance of the account of Gallant Capital Markets, Ltd, on the date when the broker filed for Chapter 11 bankruptcy.
Esther DuVal, the Chapter 11 Trustee of the jointly-administered estates of Avenica, Inc. and Gallant Capital Markets, Ltd, filed an amended complaint against the AFX entities earlier this month. As indicated in previous documents submitted with the Court, the focus of the amendments in the complaint is the relationship between the Cypriot entity – AFX Capital Markets, and the New York-based entity – AFX Capital U.S.
The bankruptcy trustee is trying to prove that AFX has had sufficient contacts and presence in the United States in order for the case to proceed in the United States instead of Cyprus.