TONY HETHERINGTON: Now Banc de Binary is hit by £8m charge after three-year court battle
Controversial binary options gambling group Banc de Binary and its boss Oren Laurent have been hit with a bill for $11million (about £8million) in penalties and compensation after a three-year court battle with American financial regulators.
The group, which sponsors Liverpool FC and expects the club's stars to help promote it, was accused by the Securities & Exchange Commission and the Commodity Futures Trading Commission of illegally marketing investment deals linked to the prices of shares, currencies and commodities without being vetted and authorised by either of the financial watchdogs.
Evidence was given to a federal court in Nevada that Banc de Binary lied to its customers, claiming that it had a 'world headquarters' on Wall Street when all it had was a maildrop accommodation address.
Some customers complained they were falsely promised that all the group's staff were within the US, and their personal data would never leave the country.
Support: Banc de Binary's Oren Laurent, left, with LFC's Olly Dale
In fact, the group is based between Cyprus, Israel and the Seychelles. Oren Laurent – also named in court papers as Oren Shabat and Oren Cohen – gives an address in Israel.
In settlement of the charges brought in the US, Laurent is personally liable to pay $150,000 (£108,000).
Banc de Binary will pay $3.95million (£2.85million) in penalties, as well as handing over $7.1million (£5.2million) it raked in from investors who were persuaded to make spin-of-a-coin bets on market movements.
Much of the money will be returned to American investors who were Banc de Binary's victims.
But British victims will not get a penny, even if they dealt with the group between 2011 and 2013, when it was posing as a Wall Street investment firm.
The US court result is the biggest penalty to face Laurent and his group, but it is not the first. It has been fined at least five times by the Cyprus authorities:
- €350,000 (£270,000) to settle charges including misleading marketing;
- €10,000 (£7,700) for concealing material information when it applied for its Cyprus licence;
- €20,000 (£14,500) for repeated violations of Cypriot laws aimed at fighting money laundering;
- €20,000 (£14,500) for breaches of its investment licence and for failing to disclose secret links to a separate business
- €125,000 (£96,000) for a series of offences including lying to the Cyprus regulator and having two top executives who were 'not of good repute'.
Public warnings against Banc de Binary have been issued by consumer protection watchdogs in the US, Canada, Australia and New Zealand. The Mail on Sunday first warned against its operations in Britain almost three years ago.
The FCA refused to comment on the American court case, and Banc de Binary appears on its register with a clean disciplinary record
Although Banc de Binary appears on the official public register of the Financial Conduct Authority, British investors have no protection. This is because the regulator regards it as a gambling operation and not a genuine investment business.
The regulator will not investigate complaints against the group, but is forced under EU rules to list it on its register because Banc de Binary is licensed in Cyprus. European Union rules require the rest of Europe to fall in line.
The FCA refused to comment on the American court case, and Banc de Binary appears on its register with a clean disciplinary record, ignoring all the fines and penalties imposed in Cyprus and the US.
Banc de Binary confirmed details of the court case. However, it added: 'It is important to note, however, that neither the CFTC nor the SEC alleged fraud on the part of Banc de Binary and/or its affiliated companies.
'The agencies alleged only that the Banc de Binary defendants offered commodity options contracts and securities in the US without proper registration.'
The company emphasised that it is 'officially registered by the FCA'.
02 failed to call off debt collectors after mystery of phoney account
R.J.W. writes: Thank you for all your efforts on my behalf, including publishing my letter on January 31 about the 'Mystery of the O2 mobile account set up in my name'. Now I have received a letter from debt collector Lowell, saying that if I do not pay them, it will take county court proceedings for £891. Fourteen days later, a County Court judgment will be registered against me.
It is stunning to see how long it takes big businesses to apply the brakes. As I reported on January 31, when I began investigating the demands you received for mobile phone bills that had nothing to do with you, O2 quickly told me: 'We accept the account is fraudulent and have closed it down with immediate effect.'
But what O2 failed to do was call off its debt collectors. By the time you read this, you will have received a written apology from O2, an assurance that you will receive no more demands and £50 will have appeared in your bank account as a gesture of goodwill.
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