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The Wall Street Journal has reported that binary options broker Banc de Binary has agreed to an $11 million settlement with U.S. authorities, following allegations that Banc de Binary illegally signed up U.S. investors to its binary options trading platform.
The CySEC-regulated company, which also has operations in Israel and the Seychelles, reached the agreement after being sued in 2013 by the SEC and CFTC. The WSJ learned of the settlement from filings made this week with a Nevada court. No official announcement has been made as yet by either the company, the SEC or the CFTC.
US authorities allege that Banc de Binary solicited and took orders from U.S. customers between 2011 and 2013, sidestepping a U.S. ban on off-exchange binary option contracts. The company allegedly used the address of a “virtual office” in New York’s Trump Tower on its website and in communications with U.S. customers.
Under the settlement, which both the company and U.S. authorities have agreed to, Banc de Binary will pay $7.1 million in disgorgement and restitution of fees earned, $2 million in civil penalties to the CFTC, and $1.95 million in SEC civil penalties. A $9 million fund will be set up with the money to repay U.S. customers harmed by the trading platform. Banc de Binary took net deposits of $11 million from more than 6,600 U.S. customers, according to the CFTC.
In the court filings, Banc de Binary said it neither admits or denies the allegations. A Banc de Binary spokesman on Thursday told the WSJ:
We look forward to putting this behind us. We thank the U.S. agencies for their professionalism during the course of this matter.
Banc de Binary founder Oren Laurent, who was also added to the CFTC complaint, will pay $150,000 as part of the settlement.
The SEC/CFTC settlement follows a smaller but still significant €350,000 (USD $385,000) settlement Banc de Binary reached with Cyprus financial regulator CySEC at the end of January, over possible violations around customer marketing and checks on client suitability. It was the fourth time in a year that Banc de Binary had been censured by CySEC.
The original WSJ article can be seen here.