Russian Court approves blocking of unlicensed Forex dealer website

Maria Nikolova

The entity whose name is not disclosed is registered in Bulgaria but is not authorized to offer its services in Russia.

A Court in the city of Kazan has granted a motion by the prosecutors to block a website offering Forex services. The prosecutors have conducted an investigation in response to an investor who complained about violations of the Russian securities laws.

The investor, who used the services of a Forex company registered in Bulgaria, invested more than RUB 4 million in online trading. The company was not authorized as a Forex dealer in Russia although it was offering Forex services to Russian clientele. The plaintiff lost all of his investments with the broker allegedly due to spikes in the securities market.

In light of these findings, the prosecutors office filed a complaint with the Court in Kazan asking that the Court determines the information disseminated via the Forex firm’s website as unlawful. The motion by the prosecution has been fully granted by the Court but the ruling has yet to come into effect.

There are only four licensed Forex dealers in the Russian Federation. In December 2018, the Russian central bank announced it was annulling the Forex dealer licenses of five firms, including local majors like Alpari Forex and Forex Club LLC. The licenses were taken away due to repeated violations of the Russian securities laws by the Forex firms.

Russian information agency TASS has reported that the activities of the five companies that were slammed by the Central Bank of Russia were focused on aggressive advertising and withdrawing Russian clients to foreign jurisdictions. This explanation has been provided by Larisa Selyutina, Head of the Securities Market and Commodity Market Department.

“All companies whose licenses have been revoked are ‘subsidiaries’ of large foreign forex dealers with recognizable brands, operating mainly in foreign forex markets. The decision to revoke is connected with the regulator’s deep concern for enormous risks for Russian citizens from the companies’ activities,” Selyutina was quoted as saying.

A company whose Forex dealer license is taken away may continue its operations as a legal entity in Russia, as this is permitted by the Russian laws. The clarification was provided by Vladimir Chistyukhin, Deputy Governor of the Bank of Russia, in an interview for information agency TASS.

Mr Chistyukhin said that the Russian laws differentiate between a legal entity and a licensed professional participant in the financial market. When the license of a participant is annulled this does not mean that the legal entity has to stop its activities. This entity is not allowed to conduct certain operations but no one can order it to close its website. Furthermore, this entity may still appear in the search results given by search engines.

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