CySEC Delists Two Asset Managers, FXFINPRO From Compensation Fund

The Cyprus Securities and Exchange Commission (CySEC) today published a list of financial services providers that were disbarred from its lifeboat scheme. The clients of these brokers, however, are still entitled to benefit from the Investor Compensation Fund (ICF), which serves to protect the claims of covered clients and provide them with compensation in case a member couldn’t meet its financial obligations.
The list includes two asset managers, AMG Kapital Ltd and Agentrisk Europe Limited, and the now-defunct FX broker PFX Financial Professionals Ltd, which operates the brand .

The Cysec further explains to the public that “It should be noted that losing membership of the fund does not mean a loss covered clients’ rights to compensation for investing that took place until the loss of membership. Any outstanding debts owed by members to the fund, continue to exist until they are paid, irrespective of their deletion.”
The CySEC has already initiated the process of compensating the clients of FXFINPRO, which had after the regulator raised concerns over practices by the company and its executives. It also hit executives of PFX Financial Professional with regulatory bans and financial penalties for violations of the local laws.
In particular, the company’s CEO, Evgenios Martinides, and executive director Yaroslav Martynenko were blamed over their omission and negligence during their time in office. FXFINPRO CEO was ordered to pay €350,000 in fines and was also banned from acting in a management capacity relating to the financial sector for ten years.
What’s next?
The regulator often kickstarts the compensation payment procedure after it revokes the authorization of a company that is not expected to pay back its obligations in the near future.
The next step, if any, will see the ICF inviting covered clients to make their claims against the company, designating the procedure for filing compensation applications and the deadline for their submission. Next, the fund publishes the details in at least two local newspapers, including the address at which investors may be informed about the progress of their applications.
The amount of the compensation payable to each client is calculated in accordance with the contractual terms governing his relationship with the faltering broker, but in general, the maximum amount doesn’t exceed €20.000.
Earlier in 2019, the  maximum compensation for valid claims to be either 90 percent of the cumulative covered claims or €20.000, whichever is lower. Therefore coverage = Min (90 percent Χ claimed amount, €20.000). This means that an investor who holds €50.000 with a CIF, which runs into trouble and is unable to pay, will get €20.000 from the ICF. However, if the claim is for €10.000, the coverage will be only 90 percent or €9.000, not 100 percent, as previously calculated.

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