Cyprus' opposition party to challenge CySEC decision on IronFX

Cyprus' second largest and biggest opposition party, AKEL, is set to challenge an alleged inaction by the Cyprus Security and Exchange Commission (CySEC) over the continued operation of Cypriot Investment Firm (CIF) IronFX Global Ltd, a party official told Xinhua.

AKEL chief Andros Kyprianou's personal assistant Marina Savva told Xinhua recently that Kyprianou wrote to the CySEC chief asking why it had not acted towards withdrawing IronFX's operation license after it had been fined for possible violations of the Investment Services and Activities and Regulated Markets Law.

The issue with IronFX surfaced after about 160 Chinese clients and their investment brokers filed a court action in a Limassol court in January 2015, for not meeting their withdrawal requests.

CySEC initiated an investigation into the company's activities and, at the request of IronFX, it reached a settlement with the company in November 2015, which included a 335,000-euro fine (379,707 U.S. dollars) for breaches of the law.

CySEC said at the time about the company "there was reasonable suspicion of it committing possible violations of the the law."

Kyprianou wrote to CySEC chairman Demetra Kalogerou last month, pointing out that the commission had not issued any announcement on whether IronFX had complied with the provisions of the law after it was fined.

"The CIFs, irrespective of having been fined or a compromise has been reached, are obliged to proceed within two months with taking corrective measures for improving their internal procedures and practices, with a view of fully complying with their obligations under the law," Kyprianou said in his letter.

He pointed out that IronFX had not been suspended from operating as a CIF, despite CySEC having at the time suspended the operation license of CIF Pegase Capital, on the grounds "that there are suspicions that it did not comply with the provisions of the law" within the period of a month it was given to correct its practices.

He also asked whether the commission had ascertained violations by the CIF of the relevant regulations and directives and more specifically of provisions related to the correct management of risks, the protection of the clients' interests when executing orders, and the protection of the clients' accounts against making use of the accounts for its own benefit.

Meanwhile, Kalogerou confirmed to Xinhua that it had received the letter from Kyprianou and had sent back an answer.

Asked about the CySEC decision to fine IronFX after it reached a compromise with the CIF, Kalogerou said a period of two to three months had been given to the company to amend its practices for which it was fined.

Kalogerou did not specify which practices CySEC was expecting IronFX to correct.

But when asked about the refusal by IronFX to allow customers to withdraw funds, Kalogerou said the company claimed it did so under contractual terms over which CySEC had no jurisdiction.

"It is a matter only for a court or for the ombudsman to deal with," she said.

A court action in Cyprus could take more than three years to complete.

IronFX claimed that the complaining customers were being investigated for a breach of their contracts by allegedly cooperating with a competitor company.

But Savva told Xinhua they did not consider CySEC's explanations and were going to pursue the issue further.

Source: XINHUA