French financial regulator Autoritédes Marchés Financiers (AMF) has announced that its AMF enforcement committee has fined a French bundling agent of a Cypriot investment service provider and its manager a total of €400,000 for breaching professional obligations.。

In its ruling of 10 November 2023, the Executive Board imposed a fine of €300,000 on France Safe Media (FSM) and banned it from acting as a bundling agent and providing receiving and forwarding order (RTO) services for 10 years.。The executive board also fined its manager, Lior Mattouk, €100,000 and banned it from managing or leading any entity that operated and provided RTO services as a bundled agent for 10 years.。

The enforcement committee found that the FSM had five violations related to conducting RTO business on behalf of third parties between January 2019 and September 2021.。As a bundling agent for VPR Safe Financial Group Limited, a Cypriot investment services provider, FSM offers its clients the opportunity to subscribe for Contracts for Difference (CFD) through an account on an online platform called "Alvexo."。A binding agent is an intermediary that acts on behalf of a service provider.。

Alvexo is a Cyprus-based retail forex and CFD brokerage brand focused on France and Italy.。We note that VPR / Alvexo itself has some problems with the regulators in Cyprus。Alvexo operator VPR fined €100,000 by CySEC for CFD marketing in 2021。In August 2022, CySEC partially revoked VPR / Alvexo's CIF license for a series of violations, including failure to demonstrate fair, honest and professional conduct in providing investment services to customers, and misleading advertising.。CySEC reinstated VPR's license last month。

With regard to the fines imposed on FSM and Lior Mattouk, the Commission found that FSM had failed to demonstrate that it had inspected its sales staff for minimum qualifications and an adequate level of knowledge, and that FSM had provided the inspection team with a test to assess the knowledge of its sales staff, which had been prepared after the start of the investigation period, and that its content was inadequate.。

The inspection team subsequently noted that the questionnaire used to assess client knowledge and experience was inadequate and that the scoring system associated with the questionnaire was inappropriate。In addition, the committee found that account managers interfered with the evaluation process for potential customers, asking them to change their answers or refill the questionnaire, thereby rendering the questionnaire useless。The Committee is of the view that FSM is therefore unable to determine whether its customers or potential customers have the necessary experience and knowledge to understand the risks associated with the products or services provided.。

The Commission also found deficiencies in the FSM's communication on the promotion of CFDs, noting that it did not properly warn of the risks associated with CFDs in its promotional banners and did not comply with the prohibition on the promotion of CFDs accounts other than limited risk accounts.。

In addition, the Commission found that FSM had failed to comply with its obligation to inform customers of the identity of its binding agent and the identity of its principal in its contacts with customers and potential customers.。

Finally, the Committee is of the view that the FSM has not exercised due diligence and diligence in its audit.。

The committee held that the FSM's dereliction of duty was to blame on its manager, Lior Mattouk.。

The Financial Markets Authority noted that the decision could be appealed。