The Cyprus Securities and Exchange Commission (CySEC) announced today that it is upholding the suspension of Depaho Ltd, which operates the retail foreign exchange brands GTCM, FXGM and TRADEAPP.
In July, Depaho was initially flagged for non-compliance and its license was temporarily suspended by CySEC following multiple allegations of multiple violations.
The CySEC now extends the punitive measures because the firm was always accused of having acted against the interests of investors, and more generally of the regular functioning of the capital markets. Depaho has until the end of September 2021 to comply with the CySEC provisions and request to reactivate its license once again.
In particular, Depaho is accused of providing investment advice without obtaining prior authorization to do so. The company also appears to have problems with its organizational requirements as well as shortcomings in the implementation of its conflict of interest policy.
Citing section 25 (1) of the law, the CySEC statement further states that Depaho failed to act “honestly, fairly and professionally when providing investment services to clients in accordance with the best interests of its customers “. By extension, the regulator alleges that the company does not understand the financial instruments it offers nor does it assess the compatibility of these products with customers.
CySEC also raised concerns about Depaho’s marketing practices as its clients were unable to understand the nature and risks of certain financial instruments recommended by the company. In addition, the broker has been accused of outsourcing its marketing activities to third parties and at times misrepresented the qualifications of its staff to potential clients.
Depaho Ltd operates through its brand name FXGM and its domain names www.depaho.com; www.fxgm.com; www.gtcm.com; www.tradeapp.com. In 2013, the company purchased the FXGM brand and the domain name www.fxgm.com from FX Global Markets (FXGM), which in turn relinquished its license in the same year.
Depaho is obliged to act within the allotted time to comply with the necessary arrangements and then to request to reactivate its license once more. But as long as the license suspension is in effect, the company is not allowed to enter into a business relationship with anyone, accept a new customer, or provide services.
In addition, Depaho must, if existing clients wish, close all open positions on clients’ contracts (on time or earlier if the client so wishes). It will also be necessary to return to existing customers all of their earned funds and profits if the customers wish to do so.
In the meantime, the company must upload notices of its license suspension across all of its sites, which in this case have not yet taken effect.