Consob, the Italian securities regulator, has once again dropped the hammer on Hoch Capital Ltd, CySEC licensed Forex & CFD broker, which was ordered in December to cease operations in the country. The watchdog has contacted Italy’s internet service providers (ISPs), requesting that they block access to Hoch’s website, www.tradeatf.com.
“Hoch Capital Ltd, an investment company of Cypriot law, is violating the ban imposed on it by Consob on 5 December 2019 (delibera n. 21171 del 5 dicembre 2019), pursuant to Article No. 7-quater, paragraph 4, of the Legislative Decree No. 58/1998, to continue to provide investment services, to solicit and to acquire new customers in Italy as well,” Consob said in a statement.
The latest action was supported by the “Decreto Crescita’ law allowing CONSOB to obstruct Italian investors’ access to online brokers. The regulators took similar action throughout the past few months, ordering nearly 184 domains to be blocked.
Consob has banned Hoch Capital back in December 2019, which was the first time to exercise its authority to ban a firm from marketing its products to the Italian traders.
The watchdog said the ban was necessary to protect Italian investors after the Limassol-based broker repeated its violations despite the measures adopted by its original regulator (CySec).
According to the regulator, Hoch Capital Ltd also continued to break laws even after Consob sent several complaints to the Cyprus Securities and Exchange Commission about its misconduct. The claims refer to non-compliant practices made by the brand’s operator, including promoting the contracts for difference (CFDs) to non-professional investors.
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The company has also violated the EU directive that mandates negative account protection, ensuring that customers can’t lose more than their trading stake. Further, the Consob accuses Hoch Capital staff of exercising pressures on their clients to deposit more funds, though the current rules forbid bonuses and other incentives that may have encouraged overtrading in recent years.
Settlement with CySEC
Hoch Capital is now barred from providing investment services in Italy. The decision also prevents the Cypriot intermediary from soliciting customers or from continuing their current relations with Italian clients. The company will, therefore, have to close the accounts of its Italian traders.
At the time, the financial watchdog clarified that it made the decision under the article 7-quarter, paragraph 4 of the Consolidated Law on Finance (TUF), as well as article 86 of Mifid2. This legislation allows CONSOB to order investment firms and brokers operating in the country from another EU member state, through the EU passporting regime, to cease their operations after informing the competent authority of the member state.
“Following the CONSOB’s resolution, the Company undertook immediate actions as it was required by the said resolution and will cooperate in full with the Italian regulator by taking all the relevant measures to fix the current situation,” Hoch Capital commented exclusively to Finance Magnates.
“It is important to state that Consob resolution is a precautionary measure regarding the Company`s activity in Italy and that the Company’s authorisation for cross-border/passporting of its activities to Italy was not withdrawn,” it continued.
Separately, Hoch Capital reached a settlement with the Cyprus regulator in March 2019, paying €200,000 for alleged violations of the Investment Services and Activities and Regulated Markets Law.