The Netherlands Authority for the Financial Markets (AFM) has imposed a €1.6 million fine on Saxo Bank for regulatory breaches by BinckBank, which has since been merged with the forex and contracts for differences (CFDs) broker. Saxo Bank chose not to contest the fine.
Saxo as the “Legal Successor”
Saxo Bank acquired BinckBank, an online investment platform, in 2019 and completed the merger of the two platforms last year. The AFM announced the fine today (Tuesday), holding Saxo accountable as BinckBank’s legal successor.
Additionally, Saxo is currently evaluating acquisition offers after unsuccessful attempts at a public listing. Reports suggest interest from prominent investors, including Altor Equity Partners, Centerbridge Partners, and Interactive Brokers Group.
Details of the Violations
The Dutch regulator stated that BinckBank breached rules on asset segregation, risk management, and customer treatment during its transition to Saxo Bank. These violations, deemed “very serious,” exposed investors to unnecessary risks and undermined their confidence.
The breaches occurred between 1 January 2021 and 11 April 2023, during Saxo’s ownership. The AFM began its investigation into BinckBank in 2022 following consumer complaints and concerns raised by the company’s accountant in a critical assurance report.
Customer grievances included delayed transactions, incorrect charges, and difficulties in locating shares. The AFM found that the platform lacked proper investment portfolio records, exercised insufficient control over essential business operations, and failed to act in customers’ best interests.
“Investors must trust that their capital is safe,” said Jos Heuvelman, Director at the AFM. “At BinckBank, this was not the case. It is irresponsible that investors faced risks due to administrative and process shortcomings. Furthermore, it is unacceptable that customers with complaints did not receive adequate support.”
The fine comprises three administrative penalties:
- €500,000 for significant administrative shortcomings in investment portfolio records.
- €500,000 for insufficient control over business processes.
- €600,000 for inadequate customer treatment.
These shortcomings created uncertainty about the rightful owners of investments and funds. Customers faced issues such as delayed transfers, transaction processing errors, and overcharges for costs and taxes. Those attempting to switch brokers also encountered delays in transferring their portfolios.
This article was written by Arnab Shome at www.financemagnates.com.
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