CySEC recently fined Rodeler Ltd., the parent company of the famous binary options broker 24Options, for a sum of €156,000. Rodeler Ltd. is also the parent company of 3 other brokerage firms including GrandOption. The financial regulator has been in the talk with the brokerage company about the faults that it had found with them. They made the announcement about the decision on the fine on the 12th October 2015.
The letter that was sent from CySEC to the company, Rodeler Ltd. shows that they have violated two legislation items on the first page of its regulation.
The first legislation that Rodeler Ltd. has violated is The Investment Services and Activities and Regulated Markets Laws. The second legislation that Rodeler Ltd. was found to be convicted of is The Prevention and Suppression of Money Laundering and Terrorist Financing Law.
CySEC has explained how they arrive at the total fine based on the violations against the different parts of the provisions in the 24Options regulation. The reason that they break down the fines is to serve as a reminder to other binary options brokers that they will also get the same fine if they decide to act as a fraud and deceive customers by acting unfairly towards them. The fine that is calculated is based on a number of factors and will vary across different brokerage firms. The fines that CySEC imposed on Rodeler Ltd. are outlined below including the fine amount per section.
First of all, the company was fined for €10,000 for not keeping a proper record of the complaints submitted by the clients and solve them within the shortest period. It also did not keep track of the actions that they have taken to settle the clients’ complaints. It fails to keep sufficient record of the advertising materials used on its website. In addition, it also did not provide any operational manual on, a manual that guide its clients on certain policies and processes.
Secondly, Rodeler Ltd. was fined €20,000 for not doing anything to prevent the operational risks in regarding to the outsourcing of their operations to a different third party company.
Thirdly, CySEC fined the broker for €30,000 was fined for not acting in a way that will benefit the clients when assigning the deposit bonus to the clients.
CySEC has found out that the information provided on the site is not explained in enough details or unfair or deceptive to the clients. For this, they have been fined for a sum of €30,000.
CySEC has also found that the information they presented to the clients are not presented in a way that is easy to understand concerning how the binary options works and the risks that are associated with the binary options trading activity. It fails to provide clear information on a certain financial asset on the trading platform. The company was fined for a sum of €15,000 regarding this issue.
24Option was discovered to not take the initiative to ask their clients on whether they have any understanding on the financial instrument and know how to trade it. They fail to take the actions to warn the clients about the risks of trading the financial instrument when they know that the trading of the financial instrument is not suitable for the clients. This violation has led to CySEC imposing a €40,000 fine. 24Options also got a €10,000 fine for failing to implementing the appropriate procedure in regarding customer identification.
Finally, 24Options was fined for an amount of a €1,000 for not complying with the requirement stated in the L.188(I)/200 and Directive 8. They also did not find any evidence that suggests that they are going to take action to comply with the law. The fines outlined above totaled to €156,000 which has already been settled. Before CySEC has announced the fine, Rodeler Inc. did attempted in taking some actions to meet its requirements. CySEC said that the total fine did take into consideration the actions that Rodeler Inc. has taken to improve its company’s compliance with the regulation.
The CySEC Board Decision also offer a clear outline on the steps that 24Options need to take in order to comply with the rule. The outlining of the corrective steps shows that Rodeler Ltd. can still continue to do business in the binary options industry. The fine imposed on Rodeler Ltd. is a good opportunity for other brokerage firms to learns from the mistake and make sure that they will scrutinously obey the CySEC law.
Following the settlement of the fine, CySEC emphasized once again that the reason that they are investigating and fining brokerage firms is that they want to reduce frauds in the Cypriot trading market. CySEC has set up strict rules over the binary options brokers in the jurisdiction of Cypriot in order to enable the industry to have a healthy growth.
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