The Cyprus Securities and Exchange Commission (CySEC) this week announced a decision to impose a massive fine of €400,000 on the Cyprus investment firm Goldenburg Group Ltd.
The commission explained that it reached this decision “due to the company’s infringement of multiple provisions of the Investment Services and Activities and Regulated Markets Law of 2017 and the Regulation (EU) 1286/2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs) (‘Regulation (EU) 1286/2014’).”
More specifically, the commission said that the “Goldenburg Group Ltd, as for the period 1.11.2019-28.2.2021, failed to establish and implement effective organisational and administrative arrangements to ensure that the interests of its clients were not adversely affected by a conflict of interest”.
For the same period, CySEC stated that it discovered that Goldenburg Group Ltd did not take all appropriate measures to identify and avoid or manage a conflict of interest between the employees of the company acting as its marketing agent in the territory of Slovenia and its customers, residents of Slovenia.
During the period February-November 2020, CySEC found that “Goldenburg Group Ltd did not act fairly, honestly and professionally, when providing investment services, in accordance with the best interests of its clients, in regards to the actions/practices of the company’s employees or the employees of the company that was acting as the Company’s marketing agent in the territory of Slovenia”.
Furthermore, for the same period, the commission said that information addressed to the company’s customers in Slovenia was found to be misleading. Additionally, the commission said that the company did not ensure that its employees who were providing investment advice had the required knowledge and competence to fulfil their obligations.
According to the announcement, for the period April 2018 to October 25, 2022, CySEC also found that Goldenburg Group Ltd failed to notify in advance the supervisory authority of Slovenia that it was posting key information documents (KIDs) on its website, according to its obligation under Slovenian national law.
What is more, the commission also said that the “Goldenburg Group Ltd also failed to include necessary regulation information in key information documents”.
Commenting on the fine, the chairman of the commission George Theocharides reiterated that CySEC is committed to safeguarding investors by thoroughly addressing any improprieties.
“CySEC takes any illegal practice by supervised entities seriously and is determined to cease activities that do not comply with the existing legislation, enhancing investor protection and responsible development of the investment sector,” Theocharides said.
“The imposition of administrative sanctions is a fundamental tool we use to limit non-compliance, and we will continue to take measures against Cyprus Investment Firms (CIFs) that fail to meet their obligations,” he added.
“CIFs are called upon to ensure full compliance with their regulatory responsibilities, emphasising the reinforcement of their compliance function to safeguard investor protection,” the commission chairman concluded.