A Cyprus-based investment company which was once the “trading partner” of Manchester City has been barred from the UK after the watchdog clamped down on a network of “scams” that had taken thousands of pounds from British investors.
The Financial Conduct Authority said it would bar four Cyprus-based companies from the UK after investors lost hundred of thousands of pounds with the firms.
One of them, which traded as iTrader, became the “official online trading partner” of Premier League football side Manchester City in 2016, according to a news release on the club’s website.
“Our mutual vision of performance and integrity makes them a perfect partner for the club and we look forward to working together throughout the season and beyond,” Damian Willoughby at City Football Group, which owns Man City, said at the time.
The FCA’s investigations into the sector are continuing.Mark Steward, FCA
The club did not immediately respond to a request for comment.
It is unclear if Manchester City is still linked to iTrader.
iTrader had also used a fake endorsement from Dragons’ Den presenter Deborah Meaden, forcing the businesswoman to deny her involvement with the scheme on Twitter.
“No. Scam,” Ms Meaden responded to one Twitter user who asked her if she is associated with iTrader in 2018.
The Twitter user said that an advert for something called Bitcoin Trader had taken her to iTrader’s website.
The FCA said that the four barred companies, and their trading names, had used social media and websites carrying fake endorsement from celebrities to tempt customers into the scam.
“It appears that these firms used unauthorised celebrity endorsements on social media as part of their marketing,” the FCA said.
The watchdog did not reveal the names of the celebrities used in the “fake endorsements”.
About one of the companies, it added: “Two complainants referred to seeing the firm advertised by a well-known British writer and television presenter who has publicly denied endorsing any such products.”
It is unclear if this is a reference to Ms Meaden.
The barred firms also have links to a series of other sports teams.
Italian side Juventus, Real Madrid’s basketball team, and the Argentinian football association have all signed deals with some of the firms the FCA clamped down on on Monday, according to the teams’ official websites.
The barred companies were all using a licence from Cyprus that allowed them to operate in the UK through the EU rule known as passporting.
It is the first time that the FCA has ever used its right to take away a firm’s passporting rights.
“The FCA has removed passporting rights for these firms which effectively stops them from continuing to provide these types of products in the UK,” said Mark Steward, the executive director of enforcement and market oversight at the FCA.
“The FCA’s investigations into the sector are continuing.”
Some investors lost more than £100,000 investing in contracts for difference (CFDs), a complex form financial investment, the FCA said.
It added: “The FCA took action because consumers were not provided with sufficient information as to the nature of the investments, some were pressured into making increasingly large investments in CFDs, which referenced bitcoin, foreign exchange, shares and indices, and some were even encouraged to take out credit to make the payments.
“It also appears 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.”
Regulators in Cyprus took separate action against the firms on Monday.
The companies barred by the FCA are Hoch Capital Ltd (trading as iTrader and tradeATF), Magnum FX (Cyprus) Ltd (trading as ET Finance), Rodeler Ltd (trading as 24option) and F1Markets Ltd (trading as Investous, StrattonMarkets and Europrime).