The new year sets off with bad news for yet another binary options broker, since Stardor Limited, the firm behind Shortoption.com has failed to receive its authorisation by the Cyprus Securities and Exchange Commission (CySEC).
CySEC, as we have repeatedly discussed lately, has stepped up its game and seems to have embarked on a strict campaign to clear out all the unregulated brokerages from operating in its jurisdiction, in an attempt to remove any suspicions on the standing of Cyprus as a leading business and financial services centre. Therefore, it seems that the grace period which was granted to most brokerages operating from Cyprus has come to end and CySEC is determined to implement its rules to the full extend and all brokers who do not comply with its requirements will be ousted.
In relation to Stardor Ltd, CySEC has publicized on 10th January 2014 that during a Commission meeting on 31st December 2013 it was decided not to grant a Cyprus Investment Firm authorization to Stardor Limited. The explanation given for refusing this authorization, according to the CySEC announcement was that: “it was not possible to evaluate the suitability of the shareholder who directly holds a qualifying holding and directs the business of the Company, since: the required information for assessing his suitability, pursuant to sections 12 and 13 of the Law, has not been submitted to the Commission and despite the Commission’s repeated efforts, the shareholder did not respond to the Commission’s request for submitting to it the relevant information.”
To clarify matters we should mention that the provisions of the Investment Services and Activities and Regulated Markets Law of 2007 to which reference is made in the CySEC announcement, i.e. Sections 12 and 13, stipulate that applicants should submit copies of their academic qualifications and proof of their professional experience which render them suitable and fit to be providing financial services. Apparently, the main shareholder of Stardor Ltd could not or did not want to provide CySEC with such documentation and evidence of degrees and relevant experience.
Having therefore failed to comply with a requirement that is mandatory under the legal framework imposed by the regulator, the firm was denied CIF status and therefore should immediately “cease to provide investment and ancillary services in binary options”. Moreover, CySEC mentions in its announcement that Stardor Ltd must “take appropriate actions to settle all its obligations arising from the provision of investment and ancillary services.”
In layman’s terms the company is expected to pay out its customers and associates and suspend all operations. This does not appear to have happened yet, so watch this space as we will try to follow and report on any associated developments.