Financial Fraud Lawyers investigates
(i) What is XTB (X-Trade Brokers)?
XTB is a trading platform operating throughout Europe from its headquarters in Warsaw -PL. For this purpose, XTB has opened branch offices (i.e. companies attached to the parent company), including one in France. XTB France is located at 32 rue de la Bienfaisance (75008 – Paris) and is registered in the Paris Trade and Companies Register (RCS) under number 522 758 689. To this extent, XTB is registered in the various registers and regulated by the competent financial authorities – in Europe, by CySEC.
At key points between November 2013 and February 2020, X-Trade Brokers offered clients the opportunity to subscribe to Financial Contracts for Difference (CFDs) or pay via trading accounts as part of order execution activities on third-party accounts via its branches in France. In July 2019, the company was audited by the French Authority on Financial Markets (AMF) and had to respond to the accusations made against it. The investigation process took place over many months and required several discussions on both sides. It should be noted that the law relating to financial market rights was amended simultaneously with XTB’s misconduct.
(ii) Why did the AMF investigate XTB?
XTB made a request for anonymization of the Commission’s decision in order to protect its pre-existing customer base from the harm of the announcement. The AMF declined to grant anonymity on the grounds that the company was sufficiently well-established to overcome the ‘bad press’ generated by the announcement, and that the announcement would only marginally affect XTB’s relationship with its clients. The published edition of the AMF report will remain available on its website for 5 years from the time of the decision. The name of the broker will be included.
The AMF report states that XTB’s discrepancies have been known since November 2013. In addition to all that was raised during the investigation, we will note three points – representative of the actions taken against the company’s violations:
(a) In disseminating certain commercial slogans, XTB France ignored the prohibition on sending promotional messages regarding investment services under certain financial contracts, such as CFDs, to potentially non-professional clients. In addition, it was found that several advertisements posted on Google by the provider did not clearly and accurately refer to the risk of capital loss of CFDs.
(b) XTB France’s customer knowledge and experience questionnaire was found to be flawed: the calculation algorithms associated with the questionnaire were not able to determine whether a potential customer had the level of experience and knowledge necessary to understand the risks associated with the product or service being offered. XTB also allegedly circumvented restrictions imposed by the European Securities and Markets Authority (ESMA) and the AMF on the marketing, distribution, or sale of CFDs to retail customers – by mistakenly changing the customer categories.
(c) In violation of its own terms and conditions, XTB France failed to notify its clients of a technical incident on the trading platform made available to them, which constituted a serious difficulty that could affect the proper execution of the transaction order.
As a result of these violations, the AMF announced a financial penalty of approximately 300,000 Euros and a warning against the company’s practices, dated November 2021.
(iii) What is the situation one year after the facts?
It appears that the main source of conflict between customers and the platform today are related to violations already highlighted by users and/or sanctioned: pressure from interlocutors, malfunctioning of the platform, abnormal execution of orders, problems to withdraw money.
The opinions about the platform, which can be found on Forex Peace Army or TrustPilot, are either very flattering or alarming, without really being in between. To sort out the real from the fake, one must realize that the platform, which offers volatile and high-risk products and investments, is suitable for individuals with advanced knowledge of financial markets and speculation in trading. Only an experienced trader can claim to analyze prices and generate profit. However, it is clearly stated by XTB that (1) this risky offer is available to anyone on the platform (2) 85% of the people who choose this offer lose their capital. This means, firstly, that the 15% of experienced traders on the platform generate profit because the profit sharing is less; secondly and more importantly, that XTB makes money on the losses of the majority.
In addition, the Financial Conduct Authority warns that at least 4 fake companies are using the name XTB and its regulatory number to attract and scam customers: “XTB Global”; “XTB GROUP”; “XTB Coin Trading”; “XTB Trading”. It would appear that XTP is a victim of identity theft but implications to the contrary cannot be ruled out.
As financial dispute resolution attorneys, we urge you to be cautious against this trading platform. If you feel or have evidence that you have been defrauded by a broker, you can contact us. We will be happy to help you.
The Financial Fraud Lawyers network aims to inform private investors (traders) of potential malpractices by Forex and CFD brokers. Our mission is to assist and protect traders when they encounter brokerage practices that go against their interests.
Our articles are intended to warn, share and inform the public about the legal risks of Forex and its players. Trading financial products and CFDs as well as investing on online platforms carry legal risks.
The article was written in good faith, based on public information and client testimonials valid at the time of publication. Our articles concern the protection of the interests of individuals on online investment platforms and are published in accordance with our right to inform the public about our activity. This article is not to be considered legal advice.