The Board of the Cyprus Securities and Exchange Commission (the ‘CySEC’) wishes to inform
investors that, at its meeting held on 5 September 2016, decided to impose a total
administrative fine of €138.000 to the CIF
OptionRally Financial Services Ltd (‘the Company’)
for non-compliance with the following legislation:
1. the Investment Services and Activities and Regulated Markets Law of 2007, as amended
from time to time (‘the Law’),
2. the Directive DI 144-2007-01 of 2012 of the Securities and Exchange Commission for the
Authorisation and Operating Conditions of CIFs (‘Directive 1’),
3. the Directive DI 144-2007-02 of 2012 of the Securities and Exchange Commission for the
professional competence of Investment Firms and the natural persons employed by
them (‘Directive 2’).
The administrative fine imposed on the Company is broken down as follows:
Α. €3,000 for non-compliance with Section 28(1) of the Law, as it failed to comply at all times
with the authorization and operating conditions, as laid down in Section 18(2)(a) of the
Law and paragraphs 4(1)(f), and 14 of Directive 1, as it did not establish adequate policies
and procedures sufficient to ensure its compliance with its obligations pursuant to the
Law and Directive 1. Specifically:
i. The Company did not establish, implement and maintain an internal operation
manual, which would include all policies, procedures in relation to the approval of
marketing material and information addressed to clients or potential clients.
ii. The Company did not maintain adequate and orderly records of the information
relation to the assessment of its marketing material (record of approval of its
marketing material).
Β. €20.000 for non-compliance with Section 28(1) του Νόμου of the Law, as it failed to
comply at all times with the authorization and operating conditions, as laid down in
Section 18(2)(d) of the Law and paragraph 16(3) of Directive 1, since it did not take
2adequate measures to avoid any unjustified aggravation of the operational risk when
outsourcing activities or operational functions. Specifically:
i. The Company did not effectively supervise the carrying out of the outsourced activity
of preparing the marketing material.
ii. The Company did not have effective access to data related to the outsourced activity
of preparing the marketing material.
iii. The Company did not effectively supervise the carrying out of the outsourced activity
of customer service.
C. €30.000 as it failed to act fairly, honestly and professionally in relation to the bonus
terms and conditions accepted by the Company’s clients and the practices applied to this
respect.
D. €30.000 for non-compliance with Section 36(1)(a) of the Law and paragraph 6 of Directive
2, as the information included in its website, the information on its marketing material
and the information provided by the call centres to which it had outsourced the customer
service, were not fair, clear and non-misleading in accordance with Section 36(1)(a) of the
Law and the Company did not ensure that these satisfy the terms of paragraph 6,
subparagraph (2)(b) of Directive 2.
Ε. €15.000 for non-compliance with Section 36(1)(b) of the Law since the information
provided to clients/potential clients on its website, were not appropriate so that the
clients are reasonably able to understand the nature and risks of the investment service
offered and the specific type and the proposed financial instrument, and in accordance
with Section 36(1)(b) of the Law.
F. €40.000 for non-compliance with Section 36(1)(d) of the Law and paragraphs 15 and 16
of Directive 2, as, it failed to ask clients to provide the necessary information regarding
their knowledge and experience, to assess whether the investment service or financial
instrument envisaged is appropriate for them.
In reaching its decision, the CySEC has taken into consideration, inter alia, the following:
- the amount of administrative sanctions provided in the relevant legislation,
- the importance attributed to the need to ensure that the persons subject to the supervision
of the CySEC fully comply with the provisions of the Laws and the relevant Directives,
- the seriousness attributed to the CIF’s obligation to act fairly, honestly and professionally
in accordance to the best interests of their clients,
- the adoption of correctives measures/actions on behalf of the Company such as, inter alia,
the following:
- it has established, implemented and included in its internal operations manual, policies
in relation to the marketing material addressed to clients or potential clients.
- it has established a procedure for the review and approval of the Company’s marketing
material.
- it has proceeded to take corrective actions for the better supervision of calls conducted
3 at call centres,
- it has taken corrective measures in relation to its marketing material and the information
provided to clients or potential clients,
- it has proceeded to amendments in its website in order to comply withthe requirements of
the Law,
- it has proceeded in updating its questionnaire in relation to the appropriateness of
potential clients during the account opening procedure, which has also been included in its
internal operations manual.
- the Company has not committed a similar violation in the past.
