Topic: FCA stops BDSwiss offering contracts for differences (CFDs) to UK customers.
Date: 5th August 2021.
Overview: The FCA has acted to stop a Cypriot-based firm, BDSwiss Holding Plc, and other members of the BDSwiss Group from offering high risk contracts for differences (CFDs) to UK investors. The BDSwiss Group trades using the brands BDSwiss, Swiss markets and BDS Trading.
The Financial Conduct Authority found that the BDSwiss Group used the fact that one of its firms was regulated in the UK to convey legitimacy on the group as a whole. However, 99% of UK consumers taken on by the group traded through the group’s overseas entities. These overseas firms had no authorisation to provide regulated services in the UK, and consumers who traded with the overseas firms lost the protections given to consumers who trade with an authorised firm. In particular, the overseas firms did not comply with the FCA’s restrictions on the marketing and sale of CFDs to retail consumers.
Sarah Pritchard, Executive Director, Markets at the FCA said:
‘This group was selling high risk investments to UK investors in breach of our perimeter and the rules for CFDs we have put in place to protect retail investors.
Many investors were attracted to the firm via social media accounts. Consumers should be very wary of those on social media making promises which look too good to be true and be careful where they invest their money. We have acted where we can but once again repeat our call for restrictions on this type of advertising to be included in the Online Safety Bill.’
The FCA identified serious concerns with the sales and marketing practices of the BDSwiss Group, including the use of misleading financial promotions which made unrealistic claims about the likely returns, failed to state clearly the nature of the financial instruments being marketed and failed to outline the risks involved in trading CFDs. The Group and its affiliates frequently contacted consumers directly, using social media platforms to make contact and market their products
The FCA has required BDSwiss Holding Plc to stop conducting any regulated or marketing activities in the UK and has directed it to take all reasonable steps to stop other members of the BDSwiss Group doing the same. It has also ordered the firm to close all trading positions and return the money to customers.
Topic: FCA wins case against Avacade in the Court of Appeal
Date: 4th August 2021
Overview: The Court of Appeal has upheld findings of breaches against Alexandra Associates (UK) Limited trading as Avacade Future Solutions (AA), and Craig and Lee Lummis in a case brought by the Financial Conduct Authority (FCA).
The FCA alleged, and the High Court found, that Avacade Limited (in liquidation), AA, Craig Lummis, Lee Lummis and Raymond Fox engaged in arranging and promoting investments without FCA authorisation and made false and misleading statements to investors which induced them to transfer their pensions into self-invested personal pensions (SIPPs) and then into alternative investments such as HotPods (office space available for rent), tree plantations and Brazilian property developments.
The appeal was brought by AA, Craig and Lee Lummis and today’s decision by the Court of Appeal upholds these findings.
Mark Steward, the FCA’s Executive Director of Enforcement and Market Oversight said: ‘The Court of Appeal decision vindicates the original decision and will help vindicate the rights of more than 2,000 investors who have lost pension money through the defendants’ conduct in leading them into these toxic and high risk investments.’
More than 2,000 consumers transferred in the region of £91.8m from their pensions into SIPPs. Approximately £68m of that amount was invested in products promoted by Avacade and AA and approximately £905,000 was invested into a fixed rate bond relating to a Brazilian property development. From these investments Avacade and AA earned commissions in the region of £10.8m