FCA bars Hoch Capital, Magnum FX, Rodeler, and F1Markets

Maria Nikolova

The UK regulator acted against four Cypriot investment firms in order to stop them from continuing to offer high risk CFDs to UK investors.

The UK Financial Conduct Authority (FCA) today announces  that it has taken action against four Cypriot investment firms in order to stop them from continuing to offer high risk contracts for difference (CFDs) to UK investors.

The regulator explains that these firms – Hoch Capital Ltd (trading as iTrader and tradeATF), Magnum FX (Cyprus) Ltd (trading as ET Finance), Rodeler Ltd (trading as 24option) and F1Markets Ltd (trading as Investous, StrattonMarkets and Europrime), used unauthorised celebrity endorsements on social media as part of their marketing. The firms used social media and webpages carrying fake endorsements from celebrities to entice consumers into the scams involving CFDs.

The FCA estimates that UK investors have lost hundreds of thousands of pounds in these investments. A number of customers are known to have lost more than £100,000 to the schemes.

The orders require the four companies to stop selling CFDs to UK customers, to close existing positions with UK customers, to return UK customers’ money and to notify UK customers of the FCA’s action.

The UK regulator explains that none of the firms and their operators have any actual presence in the UK and the firms have addresses in Cyprus.

The FCA took action because consumers were not provided with sufficient information as to the nature of the investments, some were pressured into making increasingly large investments in CFDs, which referenced bitcoin, Forex, shares and indices, and some were even encouraged to take out credit to make the payments.

It also appears that the firms had failed to pay money owed to investors, charged customers undisclosed fees and failed to tell them about the risks of trading CFDs.

The Cypriot-regulated firms – which were permitted to operate in the UK through a method known as passporting – must now cease all regulated activities with UK consumers.

It is the first time the FCA has used its power to remove passporting rights from a firm.

Mark Steward, FCA Executive Director of Enforcement and Market Oversight, said:

‘The FCA has removed passporting rights for these firms which effectively stops them from continuing to provide these types of products in the UK. We welcome the further action taken by the CySEC. The FCA’s investigations into the sector are continuing.’

Following the FCA’s action, and on the basis of information supplied by the FCA, the Cyprus Securities and Exchange Commission (CySEC) has fully suspended the regulatory authorisations of Rodeler Ltd and Hoch Capital Ltd and partially suspended the regulatory authorisations of Magnum FX (Cyprus) Ltd and F1 Markets Ltd.

The CySEC action means that Rodeler Ltd and Hoch Capital Ltd must cease all regulated activities entirely. Magnum FX (Cyprus) Ltd and F1 Markets Ltd, may only provide investment services to their existing non-UK-resident clients, and must not promote the provision of their investment services or take on new clients. They are also explicitly prohibited from providing investment services to existing or new UK resident clients.

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