Several months ago Cyprus based broker FxPulp had its license suspended due to a number of violations. At a meeting held at the Cyprus Securities and Exchange Commission (CySEC) in September, the Board of the regulator has decided to fine the shareholders of FXPulp Said Salem and Shaher Hasanain €150,000.
Non-executive directors of the company Savvas Savva and Marios Oikonomou have been reprimanded by the regulator for failing to adhere to the regulatory framework established by the CySEC.
Furthermore, the Cypriot financial regulator has decided to refer the case to the office of the Attorney General for it to consider whether any criminal liability incurred.
The fine is a response to misconduct at the brokerage in relation to the safety of client funds and the lack of appropriate anti-money laundering supervisory mechanisms.
The case of FXPulp gathered traction earlier this year when the Cypriot regulator concluded an investigation into the practices of the brokerage, which resulted in the suspension of its license.
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The shareholders of the company, Said Salem and Shaher Hasanain, have been holding 51 and 49 per cent of interest in the brokerage respectively. According to the regulator, both individuals failed to appropriately supervise the effectiveness of the policies of FXPulp. As a result the firm violated a number of regulations and procedures leading to the withdrawal of its license.
In addition to the administrative fine, both have been banned from the financial industry for the next five years (until November of 2020).
The CySEC statement on the matter explains that non-executive director Mr. Economou has been reprimanded based on reports of the competent persons at FxPulp about the failures of the brokerage to adhere to compliance procedures related to customer identification.
In addition external auditors have presented evidence to the regulator that client funds deposits have been misrepresented to the executive directors.
Non-executive director Mr. Sava has failed to assure compliance with legislation related to money laundering. External auditors have also identified issues with customer funds and reconciliations with the outstanding balances of customers.
Six years ago, Finance Magnates reported on an alleged connection between FxPulp and the infamous Swiss brokerage Crown Forex, when the brokerage was just starting its operations in Cyprus. Strangely the CySEC has not in any way acted to prevent future wrongdoing and has instead authorized the operations of the brokerage, while Crown Forex went into bankruptcy.