The Financial Conduct Authority (FCA) unveiled today that Magnum FX, F1 Markets Ltd, Hoch Capital and Rodeler Limited used unauthorised celebrity endorsements on social media as part of their marketing.

The orders require them to stop selling CFDs to UK customers, to close existing positions with UK customers, to return UK customers’ money and to notify UK customers of the FCA’s action, according to the regulator.

The companies used social media and webpages carrying fake endorsements from celebrities to entice consumers into the scams involving CFDs.

They are entitled to seek a review of the FCA’s action.

The FCA estimates that UK investors have lost hundreds of thousands of pounds in these investments.

None of the firms and their operators have any actual presence in the UK and the firms have addresses in Cyprus.

Taking action

The FCA took action because consumers were not provided with sufficient information as to the nature of the investments, some were pressured into making increasingly large investments in CFDs, which referenced bitcoin, foreign exchange, shares and indices, and some were even encouraged to take out credit to make the Payments .

It also appears that the firms had failed to pay money owed to investors, charged customers undisclosed fees and failed to tell them about the risks of trading CFDs.

CFDs are complex financial investments which allow traders to speculate on the movement in prices of underlying assets and can cause heavy losses to unwary or inexperienced investors.

A number of customers are known to have lost more than £100,000 to the schemes.

The Cypriot-regulated firms ,which were permitted to operate in the UK through a method known as passporting, must now cease all regulated activities with UK consumers.

Removing passporting rights

It is the first time the FCA has used its power to remove passporting rights from a firm.

'The FCA has removed passporting rights for these firms which effectively stops them from continuing to provide these types of products in the UK. We welcome the further action taken by the CySEC . The FCA’s investigations into the sector are continuing,' Mark Steward, FCA executive director of enforcement and market oversight, said.

Following the FCA’s action, and on the basis of information supplied by the FCA, the Cyprus Securities and Exchange Commission (CySEC) has fully suspended the regulatory authorisations of the four firms.

The CySEC action means that Rodeler Ltd and Hoch Capital Ltd must cease all regulated activities entirely. Magnum FX (Cyprus) Ltd and F1 Markets Ltd, may only provide investment services to their existing non-UK-resident clients, and must not promote the provision of their investment services or take on new clients. They are also explicitly prohibited from providing investment services to existing or new UK resident clients.

The Financial Conduct Authority (FCA) unveiled today that Magnum FX, F1 Markets Ltd, Hoch Capital and Rodeler Limited used unauthorised celebrity endorsements on social media as part of their marketing.

The orders require them to stop selling CFDs to UK customers, to close existing positions with UK customers, to return UK customers’ money and to notify UK customers of the FCA’s action, according to the regulator.

The companies used social media and webpages carrying fake endorsements from celebrities to entice consumers into the scams involving CFDs.

They are entitled to seek a review of the FCA’s action.

The FCA estimates that UK investors have lost hundreds of thousands of pounds in these investments.

None of the firms and their operators have any actual presence in the UK and the firms have addresses in Cyprus.

Taking action

The FCA took action because consumers were not provided with sufficient information as to the nature of the investments, some were pressured into making increasingly large investments in CFDs, which referenced bitcoin, foreign exchange, shares and indices, and some were even encouraged to take out credit to make the Payments .

It also appears that the firms had failed to pay money owed to investors, charged customers undisclosed fees and failed to tell them about the risks of trading CFDs.

CFDs are complex financial investments which allow traders to speculate on the movement in prices of underlying assets and can cause heavy losses to unwary or inexperienced investors.

A number of customers are known to have lost more than £100,000 to the schemes.

The Cypriot-regulated firms ,which were permitted to operate in the UK through a method known as passporting, must now cease all regulated activities with UK consumers.

Removing passporting rights

It is the first time the FCA has used its power to remove passporting rights from a firm.

'The FCA has removed passporting rights for these firms which effectively stops them from continuing to provide these types of products in the UK. We welcome the further action taken by the CySEC . The FCA’s investigations into the sector are continuing,' Mark Steward, FCA executive director of enforcement and market oversight, said.

Following the FCA’s action, and on the basis of information supplied by the FCA, the Cyprus Securities and Exchange Commission (CySEC) has fully suspended the regulatory authorisations of the four firms.

The CySEC action means that Rodeler Ltd and Hoch Capital Ltd must cease all regulated activities entirely. Magnum FX (Cyprus) Ltd and F1 Markets Ltd, may only provide investment services to their existing non-UK-resident clients, and must not promote the provision of their investment services or take on new clients. They are also explicitly prohibited from providing investment services to existing or new UK resident clients.