Cypriot CFD broker LegacyFX was ordered by the District Court Midden-Nederland on May 17, 2023 to pay EUR 303,000 to an investor who had lost this amount through CFD investments.
Offshore construction
In our earlier post on this broker, we wrote that LegacyFX may be evading the AFM decision banning CFDs with leverage greater than 1:30. The AFM decision also contains an “anti-avoidance provision,” which thus appears to work, even against a party that does not have a contractual relationship with the investor, but is actually offering the prohibited services from another location. This location is Cyprus, where the office of AN All New Investments Ltd. sits.
Vanuatu
Thus, the CFD broker does not get away with claiming that the customer chose to contract with another company in a tax haven outside the EU. That other company is actually a post office box company on the island of Vanuatu, named AN All New Investments (VA) Ltd. There are actually no LegacyFX employees on Vanuatu. This sham construction has now been punctured. In the past, these prohibited financial products were offered from Cyprus. After a wave of lawsuits, this is becoming less and less common. Some of these CFD companies have been looking for ways to avoid selling these products anyway. They then let the customer contract with a post office box company, effectively an empty shell where no one works. Clients are served from the Cyprus office. So these Cypriot parent companies can now be knocked back through the Dutch courts.
Read more in our previous article on LegacyFX.
