Financial Supervisory Authority withdraws authorisation of Privanet Securities Ltd

Pursuant to section 26 of the Act of the Financial Supervisory Authority, the FIN-FSA may withdraw the authorisation of a supervised entity if essential statutory conditions under which authorisation was granted no longer exist or the activities of a supervised entity constitute a material breach of the provisions governing financial markets.

The FIN-FSA has decided to withdraw the investment firm authorisation of Privanet Securities Ltd (hereinafter Privanet) after detecting several serious omissions and violations in the activities of Privanet. Privanet did not take adequate corrective measures following the FIN-FSA’s appointment on 11 March 2021 of an authorised representative to supervise the activities of Privanet. In addition, the FIN-FSA made new findings of violations following the appointment of the authorised representative.

The decision to withdraw the authorisation is based on an assessment of the overall situation of Privanet. Based on the overall assessment, the activities of Privanet have not been arranged, pursuant to chapter 7 section 2 subsection 1 of the Act on Investment Services, in a reliable manner, taking into account the nature and scale of its business. The decision is based on the fact that Privanet has not taken sufficient measures to correct the omissions that led to the appointment of the authorised representative. Furthermore, Privanet had also not identified and prevented conflicts of interest materially related to its business when it mediated securities on behalf of its parent company or close associates. When conflicts of interest arose, it did not treat its customers according to good practice and did not provide information on the nature or causes of the conflicts of interest. The FIN-FSA had already addressed similar omissions in previous decisions issued to the Privanet Group. Privanet had not taken into account shortcomings related to the valuation of its parent company’s investment assets in managing risks related to its capital adequacy. In addition, the FIN-FSA detected omissions in Privanet’s administrative procedures.

The FIN-FSA considers that the essential statutory conditions under which authorisation was granted cannot be safeguarded by the appointment of an authorised representative. The withdrawal of Privanet’s authorisation is therefore a proportionate and necessary measure to ensure customer protection and confidence in the financial markets.

The FIN-FSA’s decision does not require any actions by Privanet’s customers. Privanet must return the customer assets in its possession and terminate its responsibilities to customers, such as clearing open securities transactions, by 16 July 2021.

The FIN-FSA’s decision is not yet legally binding. Privanet has the right to appeal the decision within 30 days of receipt of notice of said decision. Information on the legal validity of the decision is available on the FIN-FSA website.

See also

• Decision by the Financial Supervisory Authority (pdf, in Finnish)
  
  
• Press release 11 March 2021: FIN-FSA appoints authorised representative to supervise the activities of Privanet Securities Ltd