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The current investment legislation allows entities that do not have a registered office in Spain or an open branch in Spain to operate to market certain products in Spain. This is known as a “European passport“.

A few days ago, the CNMV of Spain issued a statement alerting to certain inappropriate practices carried out by some of these foreign entities operating in Spain through the European passport. What are these in-convenient practices?

Marketing activities of investment services and customer acquisition through unauthorized third parties.

Typically, these entities offer through their websites what are known as “affiliation programs or partners“. These programs consist of offering remuneration to a third party for the acquisition of customers, in exchange for a fixed amount or percentage of the future revenue generated by their operation.

These third parties do not have any license to provide investment services and attract future investors through the Internet or telephone calls made through “call centers”. On many occasions these means of acquisition are characterized by their aggressiveness and inadequate information since they are not companies specialized in investment and do not have the required knowledge or capabilities.

To try to eliminate these inappropriate actions, the CNMV of Spain wants to transmit to these entities specialized in the marketing of complex products such as CFDs that are necessary:

  • Comply with the regulations of the Securities Market Law by which unauthorized companies in Spain should not be allowed to market products or attract customers in this country.
  • Allow affiliate or partner programs to only run by authorized companies because they are reserved activities.
  • Noted that it is contrary to current regulations that entities located outside the European Union may offer investment activities to retail clients residing in Spain.

The CNMV considers referring its communication to other European supervisory bodies to take legal action against entities that may be based in their territories and who are carrying out the described conduct.

The CNMV’s statement is clear on this. On many occasions these entities, which do not have a branch in Spain, but do have a registered office in an EU country, fail to comply with European  legislation on the marketing of complex products such as CFD’s and it is necessary to take legal action in the jurisdiction corresponding to their domicile.

The Law Firm Navas & Cusí, through its branch in Brussels (Belgium) will initiate legal proceedings in those European countries where such companies that market complex products such as CFDs are based in Spain, circumventing the control measures that are established to entities with a European passport and which undoubtedly constitute an attack against the necessary protection of retail clients.


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