Petition: Stop Violation of Rule of Law in Cyprus

The Petition will be automatically sent to European Authorities

Stop Violation of Rule of Law in Cyprus

Notable is the significant number of retail forex and binary options brokers (currently 218) that have obtained regulation in Cyprus as an easy way to get a European license.

But abuse of clients' money by Cypriot investment firms is widespread and systemic. Cyprus brokers have been using clients' funds for own account. This is not allowed under European rules, but Cyprus regulatory bodies and authorities do not require audited reports and don't really supervise the safety of clients' money.

The Cypriot financial regulator CySEC publicly reported to have received approx. 1800 complaints related to clients' assets in 2015. These complaints are still unsolved. Could it be that brokers are getting away with a breathtaking amount of clients' money in an EU member state?

The abuse of clients' money is possible, because Cyprus does not comply with European rules which are relevant for investor protection, such as directive 2013/34/EU on disclosure of financial statements, directive 2014/56/EU on statutory audits, directive 2013/11/EU on Alternative Dispute Resolution, directive 93/13/EEC on "unfair contract terms", directive 97/9/EC on investor compensation schemes.

Most Cypriot investment firms do not disclose financial statements timely. The last financial statements filed by most CIF's to the Registrar of Companies relate to the year 2013 or 2014.

Most Cypriot investment firms don't have their financial statements properly audited. Directive 2014/56/EU on statutory audits was not implemented in Cyprus.

The Investor Compensation Fund for Cypriot investment firms, which is a Public Interest Entity, is underfunded, its accounts are not audited and are not made public.

Retail investors should be granted access to rapid and effective national redress mechanisms. But an ADR entity for the financial sector does not exist in Cyprus. And the Cypriot justice system will take on average 1,085 days to settle (according to the EU Justice Scoreboard 2017) .

The sum of these infringements represents a systemic threat to the rule of law in Europe.

Since most Cypriot investment firms just use Cyprus only as a basis for cross-border business, these infringements do not affect Cypriot citizens (and for that reason are not properly sanctioned by Cypriot authorities), but do indeed affect citizens from all other European and third countries.

These systemic infringements ultimately lead to the violation of a fundamental right (Right to property, art. 17 of EU Charter of Fundamental Rights) by the Republic of Cyprus.


27 signatures

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