The Cyprus
Securities and Exchange Commission (CySEC) has imposed a hefty €740,000 fine on
Exelcius Prime Ltd, the operator of the 1Market trading brand, for a series of regulatory
breaches. The decision addresses violations spanning
from unauthorized service provision to inadequate client protection measures.
The total fine of €740,000, one of the highest imposed by CySEC recently, comprises as many as 9 different violations. For example, CySEC’s
investigation revealed that Exelcius Prime offered investment advice without
proper authorization, a violation that resulted in a €45,000 penalty. The
regulator also identified significant governance issues, including insufficient
time commitment from board members and a lack of collective experience at the
director level, leading to an additional €60,000 fine.
Organizational
deficiencies formed a substantial portion of the sanctions. A €240,000 fine was
imposed for failures in compliance procedures, product review processes, and
outsourcing risk management. The company also failed to provide the required
records to the regulator.
Client
protection emerged as a critical area of concern. CySEC fined Exelcius Prime
€120,000 for inadequate conflict of interest management and €110,000 for
failing to act in clients’ best interests. The firm also faced penalties for
misleading client communications and inappropriate product recommendations.
The
regulator’s decision also highlighted the company’s failure to properly assess
product suitability for clients and its premature establishment of a branch in
the Czech Republic without full disclosure to CySEC:
- €240,000: Poor organization, including bad
policies and failure to review products. - €120,000: Not managing conflicts of interest
between employees and clients properly. - €110,000: Failing to act in clients’ best
interests. - €100,000: Giving unclear or misleading
information to clients. - €60,000: Problems with the company’s board
and management structure. - €45,000: Offering investment advice without
permission. - €25,000: Not checking if products were
right for clients. - €20,000: Failing to assess if services were
appropriate for clients. - €20,000: Opening a branch in the Czech Republic
without telling CySEC everything required.
Exelcius
Prime has not yet issued a public statement regarding the fines or any
potential appeal of the decision. Interestingly, the fine was imposed at the beginning of March, but CySEC has only now decided to announce it.
Earlier, at the end of July, the regulator reported a significantly smaller fine imposed in June of €3,500.
It’s important to note that Exelcius Prime, licensed by CySEC since 2018, is currently “Under examination for voluntary renunciation of the authorization.” Moreover, the 1Market domains under which the company provided its brokerage services are no longer available, just like the exelciusprime.com website. There are indications that the company has not been conducting active operations for some time.
Source: CySEC
CySEC Imposes Increasingly
Higher Fines
Considering
that in 2023 CySEC imposed a total of €2.2 million in fines on financial firms,
the penalty received by the 1Market operator represents one-third of this
value.
Recent
actions, however, show that CySEC is “gaining momentum” and imposing
more substantial financial penalties for serious violations, similar to
regulators from other jurisdictions.
An example
is the €200,000 fine imposed on IC Markets in mid-July, which the regulator
claims violated its license by offering financial leverage of 1000:1. The case
has not been resolved, as the broker disagrees with the decision and intends to
appeal.
CySEC also
published today (Wednesday) its latest report summarizing the compliance
activities of regulated firms. The regulator identified several areas where
regulated entities, including local investment firms and crypto service
providers, need to improve their anti-money laundering and counter-terrorist
financing (AML/CFT) practices.
The Cyprus
Securities and Exchange Commission (CySEC) has imposed a hefty €740,000 fine on
Exelcius Prime Ltd, the operator of the 1Market trading brand, for a series of regulatory
breaches. The decision addresses violations spanning
from unauthorized service provision to inadequate client protection measures.
The total fine of €740,000, one of the highest imposed by CySEC recently, comprises as many as 9 different violations. For example, CySEC’s
investigation revealed that Exelcius Prime offered investment advice without
proper authorization, a violation that resulted in a €45,000 penalty. The
regulator also identified significant governance issues, including insufficient
time commitment from board members and a lack of collective experience at the
director level, leading to an additional €60,000 fine.
Organizational
deficiencies formed a substantial portion of the sanctions. A €240,000 fine was
imposed for failures in compliance procedures, product review processes, and
outsourcing risk management. The company also failed to provide the required
records to the regulator.
Client
protection emerged as a critical area of concern. CySEC fined Exelcius Prime
€120,000 for inadequate conflict of interest management and €110,000 for
failing to act in clients’ best interests. The firm also faced penalties for
misleading client communications and inappropriate product recommendations.
The
regulator’s decision also highlighted the company’s failure to properly assess
product suitability for clients and its premature establishment of a branch in
the Czech Republic without full disclosure to CySEC:
- €240,000: Poor organization, including bad
policies and failure to review products. - €120,000: Not managing conflicts of interest
between employees and clients properly. - €110,000: Failing to act in clients’ best
interests. - €100,000: Giving unclear or misleading
information to clients. - €60,000: Problems with the company’s board
and management structure. - €45,000: Offering investment advice without
permission. - €25,000: Not checking if products were
right for clients. - €20,000: Failing to assess if services were
appropriate for clients. - €20,000: Opening a branch in the Czech Republic
without telling CySEC everything required.
Exelcius
Prime has not yet issued a public statement regarding the fines or any
potential appeal of the decision. Interestingly, the fine was imposed at the beginning of March, but CySEC has only now decided to announce it.
Earlier, at the end of July, the regulator reported a significantly smaller fine imposed in June of €3,500.
It’s important to note that Exelcius Prime, licensed by CySEC since 2018, is currently “Under examination for voluntary renunciation of the authorization.” Moreover, the 1Market domains under which the company provided its brokerage services are no longer available, just like the exelciusprime.com website. There are indications that the company has not been conducting active operations for some time.
Source: CySEC
CySEC Imposes Increasingly
Higher Fines
Considering
that in 2023 CySEC imposed a total of €2.2 million in fines on financial firms,
the penalty received by the 1Market operator represents one-third of this
value.
Recent
actions, however, show that CySEC is “gaining momentum” and imposing
more substantial financial penalties for serious violations, similar to
regulators from other jurisdictions.
An example
is the €200,000 fine imposed on IC Markets in mid-July, which the regulator
claims violated its license by offering financial leverage of 1000:1. The case
has not been resolved, as the broker disagrees with the decision and intends to
appeal.
CySEC also
published today (Wednesday) its latest report summarizing the compliance
activities of regulated firms. The regulator identified several areas where
regulated entities, including local investment firms and crypto service
providers, need to improve their anti-money laundering and counter-terrorist
financing (AML/CFT) practices.
