Investment firm fined over target market and conduct failures

Cyprus’ financial watchdog CySEC on Monday announced that it imposed a €100,000 administrative fine on Cyprus Investment Firm Wonderinterest Trading Ltd after identifying repeated breaches of licensing and conduct rules, in a move aimed at protecting investors and market integrity.

The Cyprus Securities and Exchange Commission said the decision was taken by its board following findings of non-continuous compliance with operating licence conditions by the firm.

The violations were committed during the period from 2022 to 2024 and concerned provisions of the Investment Services and Activities and Regulated Markets Law of 2017, according to the regulator.

CySEC said €50,000 of the total fine was imposed for breaches of section 22(1) of the law, as the company failed to comply at all times with its authorisation conditions.

This related in particular to sections 17(2) and 17(3)(c), with CySEC saying the firm did not establish adequate policies and procedures and did not specify an identified target market of end clients for each financial instrument.

The regulator added that Wonderinterest Trading Ltd also failed to ensure that all relevant risks to the identified target market were properly assessed.

A further €30,000 fine was imposed for a breach of section 25(1), as the company did not act honestly, fairly and professionally when providing investment services to clients, nor in accordance with their best interests.

CySEC also imposed €20,000 for a violation of section 25(3)(a), stating that the company did not ensure that all information provided to clients or potential clients, including marketing communications, was fair, clear and not misleading.

In explaining its decision, CySEC said it attached particular importance to the implementation of appropriate internal policies and procedures by Cyprus Investment Firms within the framework of their operations.

“For the imposition of the administrative fine, CySEC took into account, among other, the importance attached to the implementation of appropriate policies and procedures by a CIF within the framework of its operations, as well as the need to ensure the protection of the investing public and the clients of CIFs,” the regulator said.

It stressed that “such protection is achieved when the information provided by CIFs enables clients to make informed decisions“.

CySEC also took into account that during the period under review the company did not adequately safeguard the interests of its clients.

It further highlighted the obligation of investment firms to ensure that financial instruments are distributed only to the identified target market of end clients, in line with the needs of that market and following a proper assessment of associated risks.

According to the commission, this approach is necessary to ensure that investment services operate in the best interests of clients and uphold confidence in Cyprus’ financial sector.