Spain Regulator CNMV Exposes Fake Broker Dealer

The inclusion of certain domains means that they are not registered in Spain nor authorized to offer trading services.

The Comision Nacional del Mercado de Valores (CNMV), the financial regulatory body of Spain, announced today in a statement that it has added to its warning list a new website that is illegally offering financial services to Spanish citizens.

The financial watchdog today blacklisted a clone company that pretends to be affiliated with an established company called MCH Investment Strategies, which operates as a Spanish broker-dealer specialized in several financial services including asset management.

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The genuine MCH Investment Strategies is an approved Securities Agency and is therefore regulated by the National Securities Market Commission (CNMV) under the registration number 237.

The CNMV was keen to confirm this fact, saying in its statement: “Not to be confused with the entity MCH INVESTMENT STRATEGIES, AGENCIA DE VALORES, S.A. (MCH INVESTMENT STRATEGIES) and its web http://mchinvestmentstrategies.mch.es/es/, which is duly registered with the National Securities Market Commission with the number 237.”

As per usual, this seems like yet another instance of a scam operation where an unlicensed ‎company illegally assumes the identity of an authorized company so that traders will mistake ‎it for the legitimate entity.‎

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The CNMV accuses the named company of soliciting clients and/or providing them with investment services despite not being authorized. Consequently, the firm has been found in violation of the second paragraph of Article 17 of the Securities Markets Law.

Although the financial watchdog didn’t provide specific details, the inclusion of the domains means that they are not officially registered in Spain and are thus not authorized to offer trading services to local traders.

This is why the CNMV advises Spanish investors to check its registers before they deposit any fund with a broker, especially if the related broker used aggressive marketing techniques.

FX Brokers Come Under Scrutiny

Last year, the CNMV issued a circular setting a host of new rules regarding trading costs and risk disclosure, leverage and advertising requirements. In essence, the new guidance concerns companies that offer forex, contracts for difference (CFDs) and other speculative products such as binary options among retail investors in Spain.

More specially, the CNMV notes that any broker offering ‘excessive leverage’ greater than 10:1 needs to explicitly warn investors that it believes that such products are not appropriate for retail investors due to their complexity and the risks involved.

Operators are also required to ensure that clients are aware of the estimated cost in case they decide to close their position immediately after entering into the transaction. Furthermore, the CNMV expects that the CFDs and forex brokers will warn their clients that they can lose more than they originally invested due to the nature of margin trading.

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