Weekly newsletter - year XXIX - No. 11 - 3 April 2023

News of the week:
Watch for scams! Financial fraud: Consob blacks out 6 more abusive websites
Regulatory simplification: Consob gathers in a single document the communications regarding prospectus regulations
Save the date: 28 April 2023 Corporate governance, sustainability and shareholder dialogue
Olidata Spa: Consob approves the listing prospectus for new shares
Adoption of the Italian Code of Ethics and Independence for statutory auditors
IOSCO: toolkit for regulators on emerging retail market conduct
Alternative Financial Dispute Resolution Scheme (ACF): Chairman Barbuzzi takes stock of the first six years of activity
Luca Giuseppe Filippa appointed as new Director General of Consob
Assignment of office
Save the date - 9 June 2023 Consob’s annual meeting with the financial market at Borsa Italiana
Investor protection warnings from other regulatory authorities

Other Commission decisions

 

- NEWS OF THE WEEK -

Consob has ordered the black-out of 6 new websites offering financial services illegally.

The commission availed itself of the new powers resulting from the "Decreto Crescita" ("Growth Decree"; Law no. 58 of 28 June 2019, Article 36, paragraph 2-terdecies), on the basis of which it can order internet service providers to block access from Italy to websites offering financial services without the proper authorisation.

Below are the sites Consob has ordered to be blacked out:

- Fintech Market (website www.fintechmarket.pro and its page cfd.fintechmarket.pro);

- First Trade Cfd (website https://firsttrade-cfd.com and its pages https://my.firsttrade-cfd.com and https://webtrader.firsttrade-cfd.com);

- "Prime Markets" (website https://primemarkets.com and its page https://my.primemarkets.com);

- "Trezocapital" (websitewww.trezocapital.com);

- C.F. Global Enterprise LLC (websitewww.epicinvest24.net and its page https://webtrader.epicinvest24.net);

- Fixxfi Ltd (websitewww.fixxfi.com and its pages https://docs.fixxfi.com, https://protocol.fixxfi.com and https://dapp.fixxfi.com).

The number of sites blacked out since July 2019, when Consob got the power to order the black-out of websites of fraudulent financial intermediaries, has thus risen to 866.

The measures adopted by Consob can be consulted on the website www.consob.it.

The black-out of these websites by internet service providers operating on Italian territory is ongoing. For technical reasons, it can take several days for the black-out to come into effect.

Consob draws investors' attention to the importance of adopting the greatest diligence in order to make informed investment choices, adopting common sense behaviours, essential to safeguard one's savings: these include, for websites that offer financial services, checking in advance that the operator with whom you are investing is authorised, and, for offers of financial products, that a prospectus has been published.

To this end, Consob would remind you that there is a section on the homepage of its website www.consob.it entitled "Watch for scams!", providing useful information to warn investors against financially abusive initiatives.

***

Consob then ordered Fixxfi Ltd, pursuant to Article 7-octies, paragraph 1, letter b) of Legislative Decree no. 58/1998 (‘Consolidated Law on Finance'), to cease the infringement of Article 18 of the Consolidated Law on Finance carried out via the www.fixxfi.com website and the relative pages https://docs.fixxfi.com/, https://protocol.fixxfi.com/ and https://dapp.fixxfi.com/ (resolution no. 22653 of 29 March 2023).

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A new step forward on the road to regulatory simplification regarding prospectuses. After the last regulatory action in August 2022, Consob implemented the reduction and reorganisation of its communications over time, gathering them in a single document, which provides an updated overview and eliminates redundancies caused by the stratification of the rules over the years (Consob news of 31 March 2023) .

The goal is to facilitate the application of the European regulations introduced by the Prospectus Regulation (EU Regulation 2017/1129), which establishes the requirements for the drafting, approval and dissemination of prospectuses to be published for public offerings of securities or their admission to trading.

The initiative is part of the rationalisation of previous Consob communications and recommendations and is aimed at simplifying and promoting good practices in the application of prospectus regulations. The action takes into account the revocation of a series of previous Consob guidelines also in light of the changes introduced by the Prospectus Regulation.

Thus, the Commission has decided to gather in a single document the communications that are still applicable, regarding the prospectus, updating them to make them consistent with the Prospectus Regulation and with the subsequent EU Delegated Regulations (979 and 980 of 2019).

The updates also take into account the recent amendments to the Issuers' Regulation with particular attention to pre-filing, that is, the opportunity to explain to Consob, before requesting document approval, any specificities regarding the operation so as to simplify the procedure.

Consob then decided to update Communication no. 7 of 9 July 2020 on additional controls, in the light of the peer review of the prospectus scrutiny and approval procedures, the results of which are reported in the Final Report of ESMA, European Securities and Markets Authority, dated 21 July 2022. The guidelines that Consob has provided over time in response to specific questions, topics that are now exclusively governed by the Prospectus Regulation, will be transferred to the historical archive.

At the link, https://www.esma.europa.eu/issuer-disclosure/prospectus, numerous level 3 acts are available (Guidelines, Q&A, Statement, Peer review), which are provided by ESMA to facilitate the uniform fulfilment of the European Union provisions relating to the prospectus, harmonising the supervisory practices of the national authorities. Anyone can ask questions to ESMA relating to the practical application or converging implementation of the legislation. Before submitting a question to ESMA, financial market participants are encouraged to consider submitting the question to the competent authority of their country first.

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Consob, the Italian Committee for Corporate Governance and the Italian association for joint-stock companies, Assonime, will present a conference on "Corporate governance, sustainability and dialogue with shareholders" on 28 April from 10:00 at the Consob Auditorium.

Giancarlo Giorgetti (Minister of Economy and Finance) will open the meeting. The speakers will be Paolo Savona (Chair of Consob), Lucia Calvosa (Chair of the Italian Committee for Corporate Governance) and Patrizia Grieco (Chair of Assonime). 

At the conference, the following will be presented:

- the Consob Report on the corporate governance of Italian listed companies, which provides evidence on ownership structures, corporate bodies, meetings and transactions with related parties. The 2022 Report, which will be published on Consob's institutional website, contains an in-depth analysis of the gender diversity of the corporate bodies and an addendum on the shareholder dialogue (engagement) policies of medium-large listed companies;

- the Report of the Italian Corporate Governance Committee, which assesses the state of implementation of the Corporate Governance Code and makes some recommendations to companies for its more effective application;

- the Report on Assonime-Emittenti Titoli, which provides an in-depth analysis on the corporate governance of Italian listed companies in the light of the guidelines set out in the Corporate Governance Code. 

A detailed programme of the event and information on how to participate will be published shortly.

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Consob has approved the prospectus for the admission to trading on Euronext Milan, organised and operated byBorsa Italiana Spa, of the Olidata Spa ordinary shares deriving from the share capital increase resolved by the Board of Directors on 18 October 2022.

On 11 August 2022, the extraordinary shareholders' meeting of Olidata resolved to grant the board of directors the power to increase the share capital, excluding the stock option, up to a maximum of 10 million euro, by issuing new shares to be offered against a contribution in kind of 7.5 million euro, and a cash payment of 2.5 million euro.

The prospectus therefore concerns the admission to trading on Euronext Milan of 74,081,633 new ordinary shares of Olidata deriving from the share capital increase, fully released on 18 October 2022 for 9.1 million euro, as follows: (i) of 7.5 million euro by Cristiano Rufini, through the contribution of the aforementioned investment equal to 51% of the share capital of Sferanet; (ii) of 1.6 million euro by Le Fonti Group Srl Benefit Company, through cash payment.

Following a significant corporate crisis, as a result of which in March 2016 Borsa Italiana had ordered the suspension of Olidata shares from trading indefinitely, the issuer has implemented various actions aimed at overcoming this situation. Lastly, with a claim filed by the issuer on 13 May 2021, a procedure for composition with creditors "as a going concern" was initiated pursuant to Articles 161 and 186-bis of the Bankruptcy Law, subsequently approved by the Court of Forlì on 13 July 2022, by decree published on 20 July 2022.

The plan underlying the proposal for composition provided for, among the essential actions, (i) the share capital increase; (ii) the liquidation of approximately 12.3 million euro of debts; (iii) the gathering of external financial resources for a total of 2.1 million euro; and (iv) the disposal of the total shareholding in Italdata. At the date of the prospectus, the aforementioned actions of the plan for composition had been executed.

After the transfer of the 51% shareholding of the share capital of Sferanet Srl to the issuer, which was one of the essential actions of the plan underlying the proposal of composition, the Olidata group entered a new sector, namely the digital services sector (mainly cyber security, big data and artificial intelligence, and software development). The investment in Sferanet is the sole operational asset of the issuer.

At the date of the prospectus, the parties with shareholdings equal to or greater than 5% of the issuer's share capital are: Cristiano Rufini 53.3%; Le Fonti Capital Partner Srl 8.8%. Other shareholders with a shareholding of less than 5% hold a total share of 37.9%. The legal control is therefore the responsibility of Cristiano Rufini pursuant to Article 2359, paragraph 1, no. 1 of the Italian Civil Code and Article 93 of the Consolidated Law on Finance.

The publication of the prospectus is one of the conditions set by Borsa Italiana for the readmission of Olidata shares to trading on the Euronext Milan market. Specifically, the readmission will be arranged by Borsa Italiana with a specific Notice, once the requirement for the publication of the prospectus has been verified.

In the "Risk Factors" chapter, the prospectus outlines the risks with regard to the economic and financial situation of the issuer and of the group, the activities and the sector in which they operate, as well as the financial instruments admitted to trading.

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The Ministry of the Economy has adopted the "Italian Code of Ethics and Independence" for statutory auditors after the adoption of the document by the State General Accounting Department (https://www.revisionelegale.mef.gov.it/opencms/opencms/normativa/codice-etico/Index.html)

The Code organically regulates both the fundamental ethical principles (integrity, objectivity, professional competence and due care, confidentiality and professional behaviour) and the principles of independence, and was drawn up on the basis of the International Code of Ethics maintained by the International Ethics Standards Board for Accountants (IESBA), taking into account the Italian regulatory framework on ethics and independence outlined by Legislative Decree no. 39/2010, as amended by Legislative Decree no. 135/2016.

The Code is aimed at licensed parties who can carry out statutory auditing activities when carrying out auditing activities and establishes rules and guidelines on the identification, assessment and management of risks of non-compliance with the fundamental ethical principles and independence, as well as identifying safeguarding measures to reduce these risks to an acceptable level.

For the sake of consistency, with the text of the IESBA Code of Ethics taken as a reference, the Code has the same division into parts, sections and subsections and the same numbering of paragraphs. Part 1 (Section 100) defines the fundamental ethical principles and the "Conceptual Framework of Reference", Part 3 (Section 300) establishes rules and guidelines for the concrete application of the Conceptual Framework and Part 4 (Sections 400 to 600) establishes rules and guidelines relating to respecting independence in the performance of audit assignments.

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On 30 March, the Chairman of the Alternative Financial Dispute Resolution Scheme (ACF), Gianpaolo Barbuzzi, presented the 2022 ACF Annual Report taking stock of the six years of activity of the ACF, the body for the out-of-court resolution of disputes between savers and intermediaries: 142 million euro returned to savers' pockets; 10,000 appeals; 9,300 rulings; 65% of decisions in favour of claimants with an application rate by intermediaries close to 100% despite the rulings of the ACF not being binding.

Savers who turned to the ACF to assert their rights were awarded 19 million euro in compensation last year for an average per capita of around 30,000 euro. Fifty-seven per cent of the claims were upheld by the body. For the first time, in 2022, the ACF examined a dispute over non-compliance with the Crowdfunding Regulation by a portal operator. For those who wish to turn to the ACF, the procedure is free of charge and does not require legal assistance.

The Annual Report shows a downward trend in the number of appeals filed by savers – 1,116 in 2022 (concerning 220 intermediaries) compared to 1,582 appeals in 2021 and 1,772 in 2020 - thanks to the gradual disappearance of ‘serial litigation', inherited from the banking crises of late 2015 and mid-2017.

"These data lead me to say – commented Barbuzzi - that the institution of the ACF has filled a protection gap and that the activity carried out in these six years has been effective, considering that its main purpose is to resolve disputes by avoiding both parties, savers and intermediaries, the wait for the still long times of civil justice".

The backlog that had been accumulating in the first three years of activity (2017 – 2019) has fallen by more than 40%, again due to the ‘serial litigation': compared to the 1,116 incoming appeals, in 2022 the ACF concluded 1,635 proceedings. "The goal, announced a year ago, of clearing the backlog by the end of 2023 is more within our reach than ever," said Barbuzzi, as the action to bring the ACF's deadline for closing proceedings within the six-month standard continues successfully.

The Chairman of the ACF then highlighted some crucial points in the relationship between savers and intermediaries:

The provision of "more information" by the intermediary is not the same as the provision of "better information". The information set must be "calibrated", drawing the customer's attention to that information (among other information) which generates genuine awareness of the characteristics and implications, in terms of risk, of the investment.

The profiling questionnaire (MiFID questionnaire) must be the saver's identity card, reflecting today's image and tomorrow's expectations. Intermediaries must not limit themselves to uncritically accepting the information provided by the client, but they have to promote dialogue and open discussion so as to remove any inconsistencies and incompleteness.

With the acceleration of banking and financial services carried out online, the number of disputes arising from investments made on online trading systems is also growing, where pitfalls for savers are often hidden due to the immediate and direct accessibility of financial instruments. The recommendation to intermediaries is to provide financial product disclosures that are as visible as possible on the website, so as to offer the broadest guarantees of protection to customers.

Any disputes involving crypto-assets of a financial nature and relating to the provision of investment services by authorised intermediaries can already be submitted to the ACF for consideration.

As savers' interest in sustainable investments grows, the ACF will pay particular attention to disputes over the offer of these products, where there is the possibility of high conflict. Intermediaries should detect clients' sustainability preferences in terms of not only formal but effective knowledge of sustainable products, avoiding opportunistic logic in the placement of financial products.

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The Board of the International Organization of Securities Commissions (IOSCO), which includes the world's top supervisory authorities, has published a Report containing indications and a ‘toolbox' to provide Member States' authorities with timely, practical and innovative guidance to address the new challenges posed by the growth of trading by small retail investors linked to digitisation.

The retail market segment – noted the Chairman of the Board of IOSCO, Jean-Paul Servais – has a growing influence on price formation and this also leads to the greater vulnerability of retail investors to misleading information, or to real scams implemented with increasingly sophisticated techniques, mainly digital, above all by cross-border operators and no longer located in a single country.

All of these developments profoundly and permanently change the way retail consumers acquire financial services and products, often through apps and online trading platforms.

The influence of social media and cross-border offerings of complex products, such as crypto-assets, can heavily influence investment decisions and expand the availability of innovative products, but often not within the reach of savers.

This creates new challenges for regulators, who are called upon to adopt new investor protection measures.

The IOSCO believes that regulators can use new technological tools to eliminate fraudulent online marketing channels, identify misconduct early and thus promptly intervene in market processes.

The toolkit described in the final report brings together the measures suggested to regulators and gathers the main lines of action into five general categories:

- heightening regulators' digital presence and online strategy to proactively address threats to retail investors;

- honing approaches to better identify and mitigate misconduct;

- enhancing cross-border and domestic supervisory and enforcement cooperation frameworks, both bilaterally and multilaterally, within the broader framework of cooperation to be enhanced between jurisdictions in the fight against financial fraud on a global scale;

- addressing the harm to retail investors that stems from crypto-assets;

- implementing new regulatory approaches against fraudulent behaviour in the retail market.

The final report, prepared by the IOSCO task force led by the Australian Securities and Investments Commission and the Central Bank of Ireland, builds on the IOSCO Report on Initial Findings and Observations About the Impact of COVID-19 on Retail Market Conduct and the Consultation Report, published in December 2020 and March 2022, respectively.

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On 29 March, the Commission appointed Luca Giuseppe Filippa as Director General, effective from 1 July 2023.

Filippa, who holds a degree in Statistics and Economics from Sapienza University of Rome, has held various professional positions at Consob, Borsa Italiana and London Stock Exchange Group.

His CV is available on the Consob website

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Consob has assigned Tommaso De Vitis, director, to the office of the Head of Corruption Prevention and Transparency, effective from 1 April 2023 and until 1 October 2023 (resolution no. 22650 of 29 March 2023)

The Commission has assigned Giusto Balzano, a board member, to the office of the Head of the Internal Control Office, starting from 1 April 2023 and until 1 October 2023 (resolution no. 22651 of 29 March 2023).

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Consob's customary annual meeting with the financial market will be held on Friday 9 June at 11:00 in Milan, at Palazzo Mezzanotte, the historic headquarters of Borsa Italiana.

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The supervisory authorities of United Kingdom (Financial Conduct Authority - FCA), Greece (Hellenic Capital Market Commission - HCMC), Poland (Polish Financial Supervision Authority - KNF), Romania (Financial Supervisory Authority, Romania - FSA), Spain (Comisión Nacional del Mercado de Valores - CNMV), Austria (Financial Market Autority - FMA), report the companies and websites offering investment, financial and insurance services without the required authorisations.

Reported by the Financial Conduct Authority (FCA) - United Kingdom:

• Smart Capitals (www.smartcapitals.org);
• Rolytradings (www.rolytradings.net);
• Global Digital Finance (www.globalfinfx.com);
• Bestpayoutfx / Best Pay Out Fx (https://bestpayoutfx.com);
• Buybitfx (https://buybitfx.com);
• Stakefxmining (https://stakefxmining.com);
• Signalsbit (https://signalsbit.live);
• Trackfxx (https://trackfxx.com);
• Primestocktrades (https://primestocktrades.com);
• Investment Mastery Fx (https://investment-masteryfx.com);
• Chart Champions (www.chartchampions.online);
• Globex Trade (www.globsextradeltds.com);
• Forex Trade Platform (https://forextradeplatform.net);
• Bit Options Pro (www.bitoptionspro.com);
• Fnory (www.fnory.com);
• Autominingplatform (https://autominingplatform.com);
• Trive-financial.com (www.trive-financial.com);
• Hotpayfx (www.hotpayfx.online);
• Forex Tradly Ltd (www.forextradlylt.com);
• Assets-Access Limited / Asset-Access Company (www.assets-accessltd.com, https://asset-access.com);
• Fundex Nft (https://fundexnft.com);
• Capitalbrightltd.com (www.capitalbrightltd.com);
• Crown Savings Bank (www.crownsavingsbk.com);
• Atlantic Invest Ltd (www.atlanticinvesteu.com);
• Giant Ifc (www.giantifc.net);
• Maxfield Consulting Group (www.maxfieldconsultinggrp.com);
• Bit Options Pro (www.bitoptionspro.com);
• Diamond Crypto Finance (www.diamondcryptofinance.com);
• International Timeshare Helpline (https://internationaltime sharehelpline.org/, www.international-timeshare-helpline.com), clone of a licensed company.
• Fast Forex Trade Lab (www.fastforextradelab.com);
• Primesware (www.primesware.com);
• Bridge Trust Capital UK (www.bridgetrustcap.org);
• Active4x (www.activ4x.com);
• Prime Growth Equity (www.primegrowthequity.com);
• Belcher Investments Markets (www.belcherinvestment.org);
• L&G Fixed Rate Bond / lg-investments.co.uk (email: enquiries@lg-investments.co.uk), clone of a licensed company;
• Saanut Corporate Finance (www.saanutfinance.com).

Reported by the Hellenic Capital Market Commission – (HCMC) – Greece:

• Itraders24 (https://www.itraders24.com);
• The-Quantum_Tech (https://the-quantum-tech.com).

The Supervisory Authority of Greece, the Hellenic Capital Market Commission (HCMC) informs investors that it has become aware that unknown persons, presenting themselves as executives of existing foreign investment firms or foreign companies that provide services related to investments in cryptocurrencies, contact citizens by telephone from telephone numbers with the prefix for the United Kingdom (+44) or for Greece (+30 211...), telling them that money has been found in accounts held by them at their company and that to access said accounts it is necessary to pay money.

The Hellenic Capital Market Commission encourages investors to be particularly vigilant and not to share personal information (information concerning their identity, phone numbers, email addresses, bank account numbers and debit or credit card numbers, etc.) with unknown persons and not to send money.

The Hellenic Capital Market Commission reminds investors that it does not supervise cryptocurrency markets, nor does it monitor the provision of services related to cryptocurrency investments.

Reported by the Polish Financial Supervision Authority (KNF) - Poland:

• Impressive Areas (www.impressiveareas.com and www.impressivearea.com).

Reported by the Financial Supervisory Authority, Romania (FSA) – Romania:

• Dawg Solution Llc 7 Geneon Invest (https://geneoninvest.pro, https://geneoninvest.co).

Reported by the Comisión Nacional del Mercado de Valores (CNMV) – Spain:

• Trade Coin (www.trade-coin.io, www.trade-coin.com, www.trade.trade-coin.com, www.trade.trade-coin.pro);
• Shadlake Ltd (https://platform.crystalscapitals.com);
• Invinco Gmbh (www.invincogmbh.de);
• https://milleniumoperations.com;
• Morgan Finance (https://morganfinance.trade);
• Onecapital Invest (www.onecapitalinvest.com);
• Trade Nation Ltd (www.td365.com);
• Theta Investments (https://www.sectorthetaasa.com), clone of a licensed company.

Reported by the Financial Market Authority – (FMA) – Austria:

• Abendroth Fortel (https://www.abendroth-fortel.com);
• Blix24 Llc / Blix24 Center (https://www.blix24.com);
• Optium Ltd (www.unitradeswiss.com);
• Mixfinancing (www.mixfinancing.com);
• Titanpros (https://www.titanpros.co);
• Universe Trading Llc / Trust Your Universe (www.tyu-trade.com, www.tyu-trade.at, www.trust-your-universe.de, www.trustyouruniverse.at, www.trustyouruniverse.org, www.trust-your-universe.net, www.tyu.at, www.tyu-trade.de, www.tyu-trading.de, portal.tyu-trade.com);
• Brookfield Eu (https://brookfield-eu.com);
• Tierra Group Ltd (https://tierra500.com).

 

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The prospectus for the admission to trading on Euronext Milan, organised and operated by Borsa Italiana Spa, of Olidata Spa ordinary shares, resulting from the share capital increase has been approved (decision of 29 March 2023).

Order, pursuant to art. 7-octies, letter b) of Italian Legislative Decree no. 58 of 24 February 1998 (Consolidated Law on Finance) to cease infringement of art. 18 of Consolidated Law on Finance, put in place by:

- "Fintech Market" via the website www.fintechmarket.pro and its page cfd.fintechmarket.pro (resolution no. 22655 of 29 March 2023);

- First Trade Cfd via the website https://firsttrade-cfd.com and its pages https://my.firsttrade-cfd.com and https://webtrader.firsttrade-cfd.com (resolution no. 22654 of 29 March 2023);

- "Prime Markets" via the website https://primemarkets.com and its page https://my.primemarkets.com (resolution no. 22658 of 29 March 2023);

- "Trezocapital" via the website www.trezocapital.com (resolution no. 22657 of 29 March 2023);

- C.F. Global Enterprise LLC via the website www.epicinvest24.net and its page https://webtrader.epicinvest24.net (resolution no. 22656 of 29 March 2023);

- Fixxfi Ltd via the website www.fixxfi.com and its pages https://docs.fixxfi.com, https://protocol.fixxfi.com and https://dapp.fixxfi.com (resolution no. 22653 of 29 March 2023).