Withdrawals from IronFx are prohibited
The Cypriot company has been holding back its own clients’ money since 2015 and making excuses for it. Until now, none of the supervisory authorities have arranged for the protection of the consumers involved.
In order to demonstrate the full weakness of the supervisory system of brokerage companies there is the tale of IronFx Global Ltd. From January 2015, the company, with offices in Cyprus, refused to return deposits and pay out their clients’ profits. No one, in the course of two years, has forced them to stop.
The sole disciplinary action put in place against IronFx was the fine brought by the Cyprus Securities and Exchange Commission (CySEC) in August 2015, worth €335,000.
It is a shame that there has not been any follow-up to the decision.
Officially the fine was applied because the company violated articles 28, 36 and 38 of European law on the subject, since they did not respect the stipulation to get work authorisation, violated the correct conduct at the moment of delivery of investment and accessory services to clients, and did not adopt all reasonable measures to obtain the best possible result for their clients.
The violation of the regulation prohibiting the use of clients’ funds for business purposes can also be added to this list.
If word got to the ESMA (Autorità europea degli strumenti finanziari e dei mercati), they could prohibit the continuation of activity as soon as possible.
The impression is that IronFx is enjoying a certain immunity. Given that it is facing a vast number of claims, instead of safeguarding defrauded consumers, the guilty party is actually capturing new ones.
When put to the test, the European law relating to the financial sector has become inadequate and lots of small investors are paying for it.
The IronFX Global Limited was founded in 2010 in Cyprus. It got authorisation from CySEC, from the Financial Conduct Authority (FCA) and from ASIC.
Its initial capital was €2,690,000 but in a very short time, it managed to involve more than 400,000 clients, not only in Europe, but also in Asia. In Italy, they have two thousand clients. It won fame in 2014 thanks to its sponsoring of FC Barcelona.
It is a shame that the Spanish club cancelled its contract last August, even though the three-year deal was due to end in March 2017.
Based on the European directive on financial instruments (MIFID), any business established in a European state is authorised to operate all over Europe and, like all brokerage companies, is obliged to hold their clients’ funds separately from their own.
Investigations into people who have been defrauded
Those that got stuck in the web of IronFX were traders from Italy, Romania, Poland, Turkey, Hungary and the Far-East.
A group of them asked and got, from the register of businesses in Cyprus, a copy of the balance sheet of the company in 2014.
It seems in the document as if there were a vast difference between the money invested by clients and those in possession of the business.
Since the amount of an attractive bonus provided by the company was equal to 40%, but could reach 100% of the deposit, for those who opened an account, and also in 2014 bonus concessions of 642 million came about, the amount deposited by clients must have comprised between 642 million and 1.6 billion dollars, from which 180 million dollars is to be subtracted, labelled as profit.
A further 128 million would have been available to the company since it was destined for the clients to whom the withdrawal of funds was not granted because they are under investigation.
In fact, they will also have deposited between 128 and 320 million dollars. This means large profits but low liquidity.
The data indicates the crime of embezzlement, paid for by the company.
The snag is that the company has justified the lost payment by attributing the responsibility for it to its own clients, and by replying to many traders requesting to carry out the withdrawal, that this had been denied and the account blocked because irregular trading operations had been carried out.
Strangely, all traders have received the same communication, in which there was no specific explanation of the irregular trading operations.
Something has jammed
The IronFX scandal seems to prove the failure of European Regulation.
The European security authorities, backed by MiFID directives, have refused to shoulder the responsibility on the subject.
Consob has also not responded to the calls of Italians involved, putting all the administrative, civil and penal responsibility back on the Cypriot authorities.
To attribute such responsibility exclusively to the only territory in which the company is found has proven to be a great shortcoming of the legislation on the subject.
This regulatory vacuum is allowing IronFX to hold onto its clients’ money, counting on total impunity.
What can be done?
The only way to try to recover your money is to speak to a good lawyer who can request the immediate withdrawal of however much is in the account.
Our lawyers, experts on the subject, are available to represent whoever has had any dealings with IronFX.
You can contact them by filling out the request form here.