CySEC slaps two entities with fines totalling €76,500

The Cyprus Securities and Exchange Commission (CySEC) imposed a number of fines for a variety of violations during March, pertaining to two entities, worth a total of €76,500, spread across three distinct decision announcements.

Firstly, the commission announced that it decided to impose an administrative fine totalling €25,000 on Treefund AIFLNP V.C.I.C. Ltd for five separate violations.

These include violations related to:

1. Article 25A(1) of the Cyprus Securities and Exchange Commission Law of 2009, as amended (“CySEC Law”).
2. Article 12(8)(a) of the Alternative Investment Fund Managers Law of 2018, as amended (“AIF Law”).
3. Article 20(4)(a) of the AIF Law.
4. Article 42(1)(a) of the AIF Law.
5. Article 76(1) of the AIF Law.

The detailed breakdown of the administrative fine imposed on the company is as follows:

• €5,000 for failing to provide all necessary guarantees for investor protection, as required by Article 25A(1) of the CySEC Law.
• €5,000 for not disclosing substantial changes to its informational memorandum to CySEC at least one month before their implementation, a requirement for obtaining the AIF manager license.
• €5,000 for failing to ensure that the net asset value per share of the company was calculated and communicated to investors, as per Article 20(4)(a) of the AIF Law.
• €5,000 for conducting share acquisitions or redemptions under terms different from those specified in its informational memorandum, violating Article 42(1)(a) of the AIF Law.
• €5,000 for failing to prepare and submit annual reports for the years 2019, 2020, 2021, and 2022, as well as semi-annual reports for the first six months of 2020, 2021, 2022, and 2023, without delay, as required by Article 76(1) of the AIF Law.

The commission explained that in determining the amount of the fine, CySEC took into account several factors, including the seriousness of the violations, the importance of ensuring compliance with regulatory obligations, and the need to protect the interests of investors.

Additionally, CySEC noted that the company in question had not previously committed similar violations.

In a separate announcement, CySEC said that it decided to impose a total fine of €1,500 on Treefund AIFLNP V.C.I.C. Ltd for non-compliance with:

• Section 58(d) of the Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007 and paragraph 6 of Directive for the Prevention and Suppression of Money Laundering and Terrorist Financing (Directive 157/2019)
• Paragraph 5(d) of the (same) directive

Elsewhere, during the same month, CySEC imposed a total administrative fine of €50,000 on AIFM Fiduserve Asset Management Ltd for “violations of the Investment Services and Activities and Regulated Markets Law of 2017”.

CySEC’s penalties against the company are detailed as follows:

Firstly, a €20,000 fine was issued for breaching section 26(2)(a) of the Law, as outlined in article 54 of Delegated Regulation (EU) 2017/565. This penalty was imposed because, between June 2018 and October 2021, the company failed to collect all necessary information regarding investors’ financial situations and investment objectives, including their risk tolerance levels. Consequently, it was unable to recommend appropriate financial instruments aligned with investors’ risk profiles and potential loss tolerance.

In addition, it imposed a €15,000 fine for contravening section 26(6)(a) of the Law, with further specifications in sections 60(2) and 60(3)(c) of the Regulation.

This penalty stemmed from two violations. During the period from December 2018 to October 2021, the company’s monthly periodic statements, for portfolios authorised for leverage, lacked the required content. In addition, between September 30, 2019, and December 31, 2020, despite repeated portfolio value decreases of over 10 per cent, the company failed to notify investors, as mandated by section 62(1) of the Regulation.

Moreover, a €5,000 fine was handed out for breaching section 26(6)(d) of the Law. This violation occurred because, from December 2018 to October 2021, the company neglected to provide investors with updated statements detailing how their investments, managed by the company, aligned with their preferences, objectives, and other characteristics.

Finally, a €10,000 fine was imposed for violating section 25(3)(a) of the Law. This penalty resulted from the company’s dissemination of information to investors on October 9, 2018, which was deemed unfair, unclear, and misleading.