In 2016, the FMA initiated a total of 162 investigations in relation to the combatting of unauthorised business (2015: 218) and concluded 204 investigations (2015: 254). As a consequence of the investigations 33 (40) warnings about dubious providers were published, 49 (49) criminal complaints brought about, and 54 (61) measures applied under administrative law (11 penal orders, 3 administrative decisions prohibiting the conducting of business, 40 procedural instructions).
The aim of the prevention of unauthorised business operations is to banish unserious providers from the Austrian financial market. In the case that someone provides financial services that require a licence without holding the requisite authorisation of the Austrian Financial Market Authority (FMA) then they will be prohibited from do so by means of an administrative decision and sanctions imposed for the legal breach. If this cannot be enforced, such as in the case of the provider operating from a foreign country, with the consequence that official measures taken by the FMA cannot take effect, the FMA instead issues a warning, published in the Gazette of the Wiener Zeitung as well as on the FMA website.
Investor Warning instrument is effective
For example, on 18 November 2016, the FMA published the investor warning stating that: “Dr. Peter Müller, Internet: www.system-mueller.com, E-Mail: [email protected], Königsallee 60F, 40212 Düsseldorf, is not authorised to provide banking transactions requiring a licence in Austria”. The website was advertising the possibility to invest money in high frequency trading (HFT) with a return of more than 15% per month on average. The investigations conducted by the FMA however found that the alleged Dr. Müller did not hold the necessary banking licence in either Germany or Austria, and also that neither the person nor the company existed at the addresses provided. Following the publication of the investor warning message, the FMA established that Austrian investors had already invested money with the provider. The FMA therefore pressed charges on the grounds of suspected breach of trust or fraud. The tracing of financial transactions ultimately showed that the money was received by a Czech citizen, who then transferred it into private accounts in foreign countries.
“The investor warning instrument has proven itself to be an effective one,” commented the FMA’s Executive Directors Helmut Ettl and Klaus Kumpfmüller: “Anyone who is contacted by a provider that they do not know of should immediately check on the FMA Website whether an investor warning has already been published about this provider, and as applicable distance themselves from any business relationship with the provider, and inform the FMA without delay about the offer that they have received.” Doing so ensures that the FMA is able to warn about dubious providers quickly, and is thereby able to contain damage being sustained by investors as soon as possible.
Promises of unrealistic returns
Against the background of the prevailing low interest environment it has been increasingly frequently observed in recent years, that investors have fallen for unrealistically high promised returns in their search for returns. Double-digit or even three-digit returns are promised, in particular from “high frequency trading”, “contracts for difference” (CFDs) or “foreign currency derivatives” (FOREX trading). “Such returns cannot be earned or can only be earned by taking extremely high risks und the currently prevailing economic conditions”, the FMA’s Executive Board warned, and also reiterated the basic rule of investment: “If something sounds too good to be true, then it generally isn’t true.”
As a rule, such financial transactions also constitute financial services that require a licence. “You should therefore check whether the provider is even authorised to conduct such financial transactions,” the FMA Executive Board warned. The FMA’s database licenced undertakings can be checked at any time by anyone via the FMA website.
Investor warnings can be viewed on the FMA website at: https://www.fma.gv.at/en/category/news-en/investor-warning/ .
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-6006
+43/(0)676/882 49 516