CySEC withdraws AFX Markets license, hits execs and auditors with hefty fines
The Cyprus Securities and Exchange Commission (CySEC) has taken away the license of AFX Capital Markets Ltd, the Cypriot arm of AFX Markets Ltd, as the company materially contravened its licensing conditions.
According to the CySEC regulatory manifest, AFX Capital Markets has had its CIF authorisation withdrawn as the company no longer meets the conditions under which the approval was granted.
The Cypriot watchdog provided a breakdown and specific details for the regulatory action, explaining that its decision was taken based on violations of ‘prudential requirements, namely the suitability of shareholders and organisational requirements.
Furthermore, CySEC has hit executives of AFX Capital with regulatory bans and fiscal penalties for violations of the local Investment Services and Activities and Regulated Markets Law.
The watchdog blamed the company’s executives, Manuela Mazzacco, Andreas Lianos, Costas Georgiades, Elena Economides Demetriou and Andreas Papagapiou over their omission and negligence during their time in office. They also failed to submit financial accounts and other information required by CySEC in a complete and accurate manner.
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Manuela MAZZACCO, Italian CEO of AFX Markets Ltd, was ordered to pay €100,000 in fines and was also banned from acting in a management capacity relating to the financial sector for five years. Another executive named Andreas Lianos was also fined €50,000 alongside a ban for a period of three years to exercise management functions in CIFs.
Explaining further, the CySEC said that these executive, while acting as members of the board of directors, did not “define, and in effect did not oversee the implementation of, governance arrangements that ensure the effective and prudent management of the Company, in a manner that promotes the integrity of the market and the interest of clients.”
“At the material time, there was no compliance with the principles mentioned in section 10(1)(b), points (i), (ii) και (iv), of L. 87(I)/2017,” the statement further reads.
The regulator has also taken actions against AFX Markets’ auditors as they did not ensure “the correctness, completeness and accuracy” of the reports they submitted to CySEC. As a result, the watchdog penalized BDO Ltd with an administrative fine of €100.000 in relation to audits of the 2014, 2015 and 2016 financial statements of AFX Markets. It also hit Anthimos, Leonidou and Partners Ltd with a regulatory fine of €100.000 for shortfalls in its audits of the FY 2017.
Of note, special administrators of AFX’s UK arm disclosed to the regulator the company was in terrible financial difficulty and that it had a heavy shortfall in client money of more than £7.0 million.