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The Magyar Nemzeti Bank (MNB) examined ex officio, in the framework of a market surveillance procedure, whether Zsolt L., domiciled in Budapest, carried out regular economic activities in the absence of portfolio management or notification regulated by the Law Investment Companies (Bszt.). agency activities.
In the course of the investigation, the MNB revealed that Zsolt L. provided portfolio investment services to Hungarian investors in an investment firm domiciled in an EEA state, and also negotiated with Hungarian investors for the same investment firm. An individual had no right to carry out any activity subject to the permission or notification of the central bank.
Zsolt L. entered into an assignment agreement and a surety agreement with the clients, on the basis of which the interested persons were represented before the investment company by a private person with a collective account. The collective account operates using the method called “trade copy”, during which each transaction concluded on the collective account is automatically tracked on the accounts of the clients connected to it. Any transactions or orders entered into the copied collective account (such as position opening, profit exception order, or position closing) will also be executed on the copy account, subject to capital allocation.
For all these reasons, the MNB, in its decision published today, prohibited Zsolt L. from engaging in unauthorized activities with immediate effect, and imposed a HUF 5 million market surveillance fine on unauthorized portfolio management activity. and HUF 11 million based on undeclared agency activity. In relation to the activities of Zsolt L., the MNB filed a complaint with the Budapest Attorney General’s Office on suspicion of unauthorized financial activity.
When determining the amount of the market surveillance penalty, the MNB primarily assessed that the violation of investment services rules is of particular importance in terms of the requirement for the safe and smooth operation of the capital market and the purity of the market. of capitals. The central bank took into account as an aggravating circumstance the fact that several Hungarian investors incurred significant losses during unauthorized activities, and Zsolt L. invested the funds of Hungarian investors in CFD transactions that were especially worrying and risky from the point of view of consumer protection. Furthermore, the offending situation it caused lasted longer.
At the same time, it was considered an extenuating circumstance that the activities of the private person had a small impact on the Hungarian capital market due to the number of Hungarian investors and the amount of their funds invested. The MNB draws the attention of private clients to the fact that the market surveillance fine does not prevent their claims arising from the guarantee contract.
Cover image: Getty Images
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