Plus500 drops 8% amid FCA investigation on customer signup

The last full trading week of Q3 did not begin great overall – the Dow Jones average was off 0.6%, the FTSE 100 down 0.9%. But shares of publicly traded Forex brokers had a particularly rough go of it as the market begins to look toward Q4.

One of the London Stock Exchange darlings of 2014, AIM-listed Plus500 (LON:PLUS), led the drop losing more than 8% of its market value on Monday. Plus500 shares now sit about 45% below their April highs, although they still are more than 20% above where they were at the end of 2013.

There was no official news out from Plus500 the past few days. However the Motley Fool reported that the drop was due to ‘speculation that the CFD provider was facing an investigation by the FCA into how the company signs up new customers’. The news was also carried by UK newspaper The Times, which stated that:

Unlike the vast majority of London-based CFD providers and spread-betting companies, Plus500 does not check on a client’s identity when they open an account, but instead carries out checks when a client wants to withdraw funds.

The Times also quotes a Plus500 spokesman as responding that the company is indeed fully compliant with money laundering rules.

Plus500 is known in the Forex industry as being a very efficient organization, doing more business with less employees than many other Forex and CFD brokers its size. It seems to specialize in ‘self-converting’ clients – traders which do not need much if any hand-holding to open an account and begin trading from the time they enter the broker’s sales funnel.

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