The Financial Conduct Authority (FCA) is taking action to stop four Cypriot investment firms from offering high risk contracts for difference (CFDs), which saw UK investors lose hundrdeds of thousands of pounds.
The FCA issued an order against Hoch Capital, trading as iTrader and tradeATF, Magnum FX, trading as ET Finance and F1 Markets, trading as Investous, StrattonMarkets and Europrime.
The regulator claimed these companies used social media and webpages carrying false endorsements from celebrities to lure consumers into scams involving CFDs.
It is understood that UK investors lost hundreds and thousands of pounds in these investments, all endorsed by the Cyprus-based firms.
FCA Executive Director of Enforcement and Market Oversight Mark Steward said: "The FCA has removed passporting rights for these firms, which effectively stops them from continuing to provide these types of products in the UK.
"We welcome the further action taken by the Cyprus Securities and Exchange Commission (CySEC). The FCA's investigations into the sector are continuing."
The FCA said consumers were not provided with sufficient information as to the nature of the investments, some were pressured into making increasingly large investments in CFDs, involving bitcoin, foreign exchange, shares and indices, and some were even encouraged to take out credit to make the payments.
It also appeared that the firms had failed to pay money owed to investors, charged customers undisclosed fees and failed to tell them about the risks of trading CFDs, the FCA said.
The regulator described CFDs as "complex financial investments which allow traders to speculate on the movement in prices of underlying assets and can cause heavy losses to unwary or inexperienced investors".
A number of customers are known to have lost more than £100,000 to the schemes.
It is the first time the FCA has used its power to remove passporting rights from a firm.
Following the FCA's action, CySEC fully suspended the regulatory authorisations of Rodeler Ltd and Hoch Capital Ltd and partially suspended the regulatory authorisations of Magnum FX (Cyprus) Ltd and F1 Markets Ltd.
The CySEC action means that Rodeler Ltd and Hoch Capital Ltd must cease all regulated activities entirely.
Magnum FX (Cyprus) Ltd and F1 Markets Ltd may only provide investment services to their existing non-UK-resident clients, and must not promote the provision of their investment services or take on new clients. They are also explicitly prohibited from providing investment services to existing or new UK resident clients.
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