The Cyprus Securities and Exchange Commission (CySEC) has issued an announcement on 13 February 2014, informing the public of its decision to suspend the CIF authorization of the company Harvest Financial Services Ltd for a period of three months according to the provisions of the relevant law, i.e. of Article 26(3) of the Provision of Investment Services, the Exercise of Investment Activities and the Operation of Regulated Markets Law.
Harvest Financial Services Ltd was the holder of CIF license 21/03 and was one of the first firms to be regulated by CySEC, since July 2003. The firm was offering forex and other services through the site www.harvestgroup.com.cy.
CySEC’s decision to suspend the license of this particular CIF, as explained in the official announcement, is that it is derived by the information submitted to CySEC that the firm is not in full compliance with the relevant law. More specifically it is in breach of articles 10 and 67 of the law which concern the height of a firm’s initial capital and own funds, since on 30 September 2012 the firm’s own capital was under the minimum permissible limit of €200.000. Moreover, it does not comply with Article 72 of the Law, which concerns the disclosure and submission of information relating to a CIF’s capital adequacy, nor does it comply with sections 39 ( 2 ) and 39 ( 5) of the Directive DI144 -2007-05 of 2012 and paragraphs 18 ( 1 ) and 18 ( 3 ) of the Directive DI144 -2007- 06 of 2012. Harvest Financial Services has failed to submit the reports concerning its capital adequacy and its large exposures on 31/3/2013 and 30/06/2013. Finally the firm is in breach of Article 114 of the Law since it has not submitted its financial accounts for the year 2012.
CySEC points out that during the suspension period of the three months the company is obliged to take the necessary steps in order to achieve its compliance with the above mentioned legal provisions. Moreover, CySEC clarifies that during the suspension period the company is not permitted, as stipulated in Article 26(5) of the Law, to provide or appear to be providing any kind of investment or ancillary services.
This new decision by CySEC is yet another tangible proof that the regulator is becoming stricter with the entities in its jurisdiction. Especially the penalties on capital adequacy matters perhaps fall within the framework of the recently issued circular by CySEC regarding the offering of bonuses by CIFs regulated by the Commission.