The Financial Conduct Authority (FCA) has prohibited three Cyprus-based firms from selling contracts for differences (CFDs) to UK customers since April.
The latest move saw it stop BDSwiss Holding Plc, and other members of the BDSwiss Group, from offering high risk CFDs to Brits.
The BDSwiss Group trades using the brands BDSwiss, Swissmarkets and BDS Trading.
The company used “the fact that one of its firms was regulated in the UK to convey legitimacy on the group as a whole” but “99% of UK consumers taken on by the group traded through the group’s overseas entities”, the regulator said.
The FCA added: “The overseas firms had no authorisation to provide regulated services in the UK, and consumers who traded with the overseas firms lost the protections given to consumers who trade with an authorised firm.
“In particular, the overseas firms did not comply with the FCA’s restrictions on the marketing and sale of CFDs to retail consumers.”
The UK regulator “identified serious concerns with the sales and marketing practices of the BDSwiss Group, including the use of misleading financial promotions which made unrealistic claims about the likely returns, failed to state clearly the nature of the financial instruments being marketed and failed to outline the risks involved in trading CFDs”.
The group and its affiliates contacted consumers directly, using social media platforms to make contact and market their products.
The FCA said that, as a result of the activities of the BDSwiss Group and its affiliates, “numerous UK consumers have lost significant sums of money”.
The watchdog has required BDSwiss Holding Plc to stop conducting any regulated or marketing activities in the UK and has directed it to take all reasonable steps to stop other members of the BDSwiss Group doing the same.
It has also ordered the firm to close all trading positions and return the money to customers.
This is now the third Cyprus firm that has been stopped by the FCA from offering CFDs to UK investors.
In April 2021, it blocked Finteractive Limited, which traded as FXVC, while in May 2021, the UK regulator prohibited ICC Intercertus Capital and other members of its group, which trade as EverFX.
Sarah Pritchard, executive director of markets at the FCA, said: “This group was selling high risk investments to UK investors in breach of our perimeter and the rules for CFDs we have put in place to protect retail investors.
“Many investors were attracted to the firm via social media accounts. Consumers should be very wary of those on social media making promises which look too good to be true and be careful where they invest their money.
“We have acted where we can but once again repeat our call for restrictions on this type of advertising to be included in the online safety bill.”