Italian reg' prohibits foreign investment firm local activities for first time

On the 12/12/19 at 7:39AM


Adrien Paredes-Vanheule

Cypriot broker Hoch Capital, operating in Italy under the free provision of investment services framework introduced by the MiFID 2 directive, faces Consob's first ever precautionary measure.

Consob announced on 10 December it adopted a precautionary measure against the Cypriot company Hoch Capital Ltd, prohibiting activities of the firm in Italy. The regulator specified in a press statement it had never used this power before.

"The prohibition, aimed at ensuring the protection of Italian investors, was necessary after the recurrent violations of Hoch Capital Ltd of the regulations in force, despite the measures adopted by the Cyprus Securities and Exchange Commission (CySec), following reports sent by Consob to CySec," Consob stated.

Limassol-headquartered Hoch Capital is operating in Italy under the free provision of investment services guaranteed by the "European passport" granted by the MiFID 2 directive. Following Consob's measure, the company is now forbidden to provide investment services in Italy, solicit and acquire new Italian customers or even carry relationships with existing Italian customers. As a consequence, Consob ordered the Cypriot broker to close all Italian customers' accounts. The Italian financial watchdog said a number of local investors complained about irregularities made by Hoch Capital, including activities like the sale of contracts for difference to retail investors, which is a prohibited practice in most EU countries. 

"The complaints refer, among others, to situations such as the total loss of the invested capital, the classification of the investor as a professional client in the absence of prerequisites and the pressures exercised by the personnel of the company to acquire additional deposits," said Consob.

Sign in