Securities were sold to US investors without first registering them by Cyprus-based Banc de Binary, SEC and the CFTC have alleged.
Banc de Binary, a Cyprus-based financial trading company has agreed to pay nearly $11 million to settle charges that it illegally sold binary options to U.S. investors. The development comes after a three-year court battle.
The company was sued by U.S. Securities and Exchange Commission in 2013, alleging it traded in binary options without first registering the securities as required under federal law. According to a representative of the company, it had about 250,000 investors in the fall of 2012, 50% to 60% of whom were located in the United States.
Banc de Binary, its founder Oren Laurent, and three affiliates agreed to jointly pay $7.1 million in disgorgement and $3.95 million in penalties as part of a settlement of the SEC’s suit and a parallel action by the Commodity Futures Trading Commission.
A federal judge has approved the settlement and authorized the distribution of the money to harmed investors through a Fair Fund. The defendants also agreed to be suspended from the securities industry for a year.
According to a news release by Michele Layne, director of the SEC’s Los Angeles regional office, “Banc de Binary and its affiliates completely disregarded U.S. laws and registration requirements, and as a result they must surrender millions of dollars and be suspended from the industry,”
“Many of the growing sector’s operators are registered in countries such as the Seychelles and Belize, where there is little transparency around their businesses or ownership,” according to Wall Street Journal.
Banc de Binary is estimated by industry experts to be one of the world’s largest binary options operators, claiming 250,000 account holders across more than 80 countries. It began its US operations in 2010, soliciting U.S customers by advertising through YouTube videos, spam e-mails, and other online advertising and holding itself out as having an office on Wall Street.