Admiral Markets AS fined for violating Securities Market Act requirements
The Financial Supervision Authority has punished Admiral Markets AS under misdemeanour proceedings by fining it 7,000 euros after the investment firm violated a Securities Market Act provision barring companies from emphasizing potential yields for prospective customers without simultaneously referring clearly to the risks related to the service.
In illustrative examples on using CFDs to trade currencies, precious metals, equity, indexes and commodities posted on its website, www.admiralmarkets.ee, Admiral Markets AS made reference only to the potential gains to be earned.
On both the Estonian and Russian language website, nine examples were used to describe how the abovementioned instruments could be traded profitably. The Russian-language version of the website showed all of the sample transactions as being solely favourable for the investor, and there was no information provided for any of the examples regarding risks related to trading. For example, the first illustrative transaction resulted in a 135 percent return in 12 hours and 30 minutes. The Estonian-language website also showed, among others, a loss-making sample transaction, which included a reference to trading risks added in the form of a link.
Depending on actual circumstances on the market, such transactions can result in either losses or gains for investors. Thus an investment firm must present information on investment services and the nature and risks of related securities in a form that allows potential customers to make a fully-informed investment decision.
Pursuant to the Securities Market Act, investment firms that fail to present information or present information incorrectly may be punished by a fine of up to 32,000 euros.