CySEC Urges Caution against Regulator Impersonators

The Cyprus Securities and Exchange Commission (CySEC) has published an announcement, urging the public's caution against fraudsters presenting themselves as CySEC officers or representatives to perform a fraud or other criminal acts.

According to the announcement, the regulator impersonators are soliciting investors for fees in exchange for settlement of bogus compensation claims related to firms under CySEC supervision. 

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The Cypriot watchdog highlights that it never sends unsolicited correspondence to investors or members of the public, nor doesit ever request any personal data, financial or otherwise. 

CySEC further explains that it has no authority or jurisdiction to collect fees for any purpose from individual investors, nor does it have authority to appoint anyone to do so on its behalf. CySEC does not authorize, verify, monitor, or is in any way involved in class actions, compensation schemes, payments between natural or legal entities or any public or private agencies. 

Such cases, according to the regulator, occur often and may be part of a sophisticated online campaign that is defrauding investors. Typically, such scams may have the following characteristics: 

• Individuals claim to be CySEC officers, appointed representatives of CySEC (e.g. legal advisors), other Cypriot supervisory authorities (e.g. the Central Bank of Cyprus or the Financial Ombudsman) and/or other real or fake bodies, such as the Insurance Indemnity Guard. 

• These scammers may contact investors that are clients of regulated entities under CySEC’s supervision, often via email which appear genuine –they carry the name, address, official stamp and logo of CySEC and fraudulently copy CySEC officials’ signature. 

• The fraudsters then make false promises to assist investors with compensation for potential damages in connection with dealings they have had with sanctioned firms (typically online trading firms offering speculative investment products).

• Through this engagement, the fraudsters illegally obtain personal information including telephone records. 

• In some cases, investors are then called via telephone in relation to an email correspondence.

The Cyprus Securities and Exchange Commission is the financial regulatory agency of Cyprus, which is one of the most preferred jurisdictions for overseas retail forex brokers. However, as an EU member state, Cyprus has also been tightening its regulatory oversight in the financial sector in recent years. Fazzaco has reported that companies hitting by withdrawal of Cyprus Investment Firm (CIF) authorization this month include Globia Wealth Ltd​, Depaho Ltd and Coverdeal Holdings Ltd​.