- Sigma Broking Limited fined £531,600 by FCA
- UK regulator’s investigation reveals a catalogue of compliance breaches
- Traders are left wondering how to spot a trusted broker
As if falling asset prices weren’t enough of a concern for investors, a £531,600 fine issued by UK regulator the FCA to broker Sigma Broking Limited has highlighted the need for investors to be wary about which platform they use for trading.
Sigma Broking Limited Fined by FCA
Sigma, at face value, looks legitimate enough. It was set up in 2008 when it specialised in futures and options trading. A move into the Contract For Difference (CFD) and spread betting markets in 2014 should have resulted in it following a fairly standard growth path. Instead, it led to a hefty fine from the UK regulator and an amber, if not a red, flag against its name.
The FCA report highlights a catalogue of errors made by Sigma’s management. It seems they didn’t build the necessary infrastructure to ensure clients were protected to the level required.
“Sigma did not perform an adequate risk assessment or engage in any other meaningful preparations to ensure its compliance with regulatory standards.”
The report continues: “Sigma’s governing body, its board of directors (“the Board”), failed to take fundamental steps, such as holding regular board meetings where directors were provided with adequate management information.”
The fact that the FCA identified that Board meetings weren’t adequately recorded using written minutes is a significant concern. Possibly more worrying is the claim made by the FCA that the compliance function was low on the list of priorities.
“Sigma’s Compliance Department operated without clear reporting lines, apportionment of responsibilities or appropriately qualified staff and failed to ensure that the firm had adequate policies and procedures in place in relation to the conduct of its CFD desk brokers.”
How to Choose a Safe Broker
The charges levied on Sigma were applied with a 10% discount. That is because the broker agreed to participate in the FCA’s ‘executive settlement process’ to avoid paying the initially quoted £590,700. That suggests Sigma is looking to put the matter behind it, take the rap, and move on.
If that is the case, it can be expected that improvements in processes and protocols will be forthcoming. But it does raise the question of how to spot irregularities at smaller brokers who, at first glance, appear to be as good as any other. Don’t forget the irregularities were identified by an FCA investigation which lifted the lid on what was going on.
Choosing a trusted broker remains one of the essential elements of any trading journey and acknowledging how tricky that can be is part of the process. The ForexFraud team once again offers the reminder that considering brokers from this list of firms comprehensively reviewed by our team of analysts provides the safest route into the market.
Crowdsourcing information about scam brokers can help others avoid falling into the traps set by disreputable brokers, and you can share your experiences here. If you would like to know more about this particular topic or have been scammed by a fraudulent broker, you can also contact us at [email protected]
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