OREANDA-NEWS. June 02, 2015.  The Board of the Bank of Lithuania decided to revoke for UAB FM FINVESTA the licence of a financial brokerage firm, issued on 28 March 2003. The licence was revoked for the firm because it did not provide the conditions for the supervisory authority to conduct effective supervision of the firm, did not ensure the protection of the customer’s assets, entrusted to the firm, provided customers with misleading information, while in the provision of investment services the firm was represented by the Head without due qualification. 

The Supervision Service of the Bank of Lithuania decided to carry out an inspection of UAB FM FINVESTA as the firm did not provide information, needed by the Bank of Lithuania for supervision, according to the procedure and within the time limits laid down in legal acts: reports on capital adequacy calculation, financial statements, reports on operations, information about the change of shareholders and registered office, as well as other information for supervisory purposes. Hence the Bank of Lithuania did not have the possibility to conduct effective supervision of the firm, and to evaluate the impact of individuals, acquiring the firm’s shares, on the firm and its management as well.

During the inspection it was ascertained that the firm did not manage the accounting of the financial instruments and monetary funds, entrusted to it by customers, as required, and, also, breached the legislative provisions requiring to store data and financial instruments as well as monetary funds owned by customers, and manage accounts so that it would be possible to immediately separate a customer’s assets from those of the firm and other customers at any time.

In addition, the inspection, carried out by the Supervision Service, revealed that the firm provided misleading information to its customers about its activities and services provided. The firm would submit statements of non-existing personal accounts, giving the misleading impression that the customer purportedly was provided the services of the accounting of financial instruments and monetary funds. Moreover, the firm submitted misleading information that it was a member of the Central Securities Depository of Lithuania and gave a wrong impression that it could properly store customers’ financial instruments and settle transactions concluded by them.  

It was also ascertained that, in the provision of investment services to customers, the firm was represented the Head of Administration without due qualifications, although only a person holding a licence, issued by the supervisory authority or another qualification, recognised by the supervisory authority, is entitled to this by legal acts. 

During the inspection of the firm, other violations of legal acts were also revealed: the firm did not apply required measures for the prevention of money laundering and terrorist financing, did not re-consider its operational risk management strategy on a systemic and regular basis, did not carry out the evaluation of internal capital adequacy, did not conclude, according to the procedure and within the time limits established by legal acts, an agreement with an audit firm on an audit of financial statements for 2014, and, also, did not comply with legal acts regulating the preparation of accounting policy. 

The decision regarding the revocation of the licence of a financial brokerage firm was adopted having taken into account the entirety of the violations of legal acts that were identified both during the inspection carried out by the Supervision Service and in conducting the firm’s supervision; also, that the firm was already subject more than once to enforcement measures for not submitting information and data, but it did not take action to remedy the situation. The fact that the firm did not provide investment services for more than 6 months before the inspection was also taken into account.  

The revocation of the firm’s licence of a financial brokerage firm by the Bank of Lithuania deprived the firm of the right to provide investment services.