The Cyprus Securities and Exchange Commission (CySEC) has just announced that it has fined the binary options broker OptionRally with €138,000 for violating the Investment Services and Activities and Regulated Markets Law. OptionRally is regulated by the CySEC and has therefore to comply with the Cyprus regulation in order to maintain its CIF trading license that enables the broker to offer its services across Europe, the watchdog stated.
The firm has been involved in one of the bigger sponsorship deals in the industry with the company’s logo appearing on the Ferrari’s Formula 1 race cars.
The CySEC fine reflects the violations of several Articles of the Investment Services and Activities and Regulated Markets Law.
The Cypriot financial regulator has issued a fine of €3,000 for non-compliance with Section 28(1) of the law, as OptionRally failed to establish adequate policies and procedures to ensure the compliance of its marketing material with the regulatory obligations. This included the failure to maintain an internal operation manual or orderly records of the information related to the assessment of its marketing materials.
The second fine of €20,000 was imposed based on the company’s violation of Section 18(2)(d) of the Law and paragraph 16(3) of Directive 1, which means that OptionRally did not take adequate measures to avoid any unjustified aggravation of the operational risk when outsourcing activities or operational functions. Specifically, the company did not supervise the carrying out of the outsourced activity of preparing the marketing material.
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Furthermore, OptionRally incurred a fine of €30,000 as it failed to act fairly in relation to the bonus terms and conditions offered to its clients and the practices applied to this respect.
The binary options broker was also fined €40,000 for not asking clients to provide the necessary information regarding their knowledge and experience, to assess whether the offered investment service or financial instrument is appropriate for them.
In addition, the administrative penalties included €30,000 for providing misleading information on its marketing material either through its website or the call centres to which it had outsourced the customer service.
CySEC has further explained that an additional fine of €15,000 was imposed for non-compliance with Section 36(1)(b) of the Law since the information provided on its website was not appropriate or sufficient to allow clients to reasonably understand the nature and risks of the investment service the company offers.
Finance Magnates received the following comments from OptionRally:
OptionRally Financial Services who manages and operates the website www.optionrally.eu, is working as usual.
In regards to the fine, the Company is obliged to act fairly, honestly and professionally in accordance to our clients best interests.
The Company adopted correctives measures/actions such as, inter alia, the following:
- It has established, implemented and included in its internal operations manual, policies in relation to the marketing material addressed to clients or potential clients.
- it has established a procedure for the review and approval of the Company’s marketing material.
- it has proceeded to take corrective actions for the better supervision of calls conducted at call centers.
- it has taken corrective measures in relation to its marketing material and the information provided to clients or potential clients.
- It has proceeded to amendments in its website in order to comply with the requirements of the Law.
- It has proceeded in updating its questionnaire in relation to the appropriateness of potential clients during the account opening procedure, which has also been included in its internal operations manual.
We would like to remind that the Company has not committed a similar violation in the past.
We truly believe the Company remedial actions and corrective measures will assist the company to achieve its goals.