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AFM imposes an order for incremental penalty payments on 5 Star Services Holding

Measure

Scale

On 08 October 2015, the Netherlands Authority for the Financial Markets (AFM) imposed an order for incremental penalty payments on 5 Star Services Holding. The AFM suspects that 5 Star has offered or continues to offer shareholdings in a collective investment company without holding a licence. The supervisor requested 5 Star to provide the information it requires to determine whether this company is indeed breaking the law. 5 Star has not yet provided this information.

 
State of affairs of legal proceedings
Order imposed Objection Appeal Further appeal
Initiated Decision taken Initiated Judgment given Initiated Judgment given
08-10-2015 16-11-2015 03-02-2016 (1) none

(1) The AFM has declared the objection unfounded while supplementing its reasons. 

Money management

5 Star offers participants the possibility via its Irish subsidiary to open what is known as a “percentage allocated money management” account. The account is linked to what is known as a master account in which transactions are performed and which is used to generate profit for the participant's account.

The AFM suspects that this involves offering shareholdings in a collective investment company. According to the Financial Supervision Act, this is not allowed without an AFM licence. The supervisor requested, inter alia, a description of the activities, participant data, an organisation chart, information material, an annual report and account statements in order to be able to determine whether the law is being broken.

5 Star has not provided the requested information within the term set. 5 Star has therefore been obliged to pay the penalty payments since 23 October 2015. The AFM has still not received the information. The incremental penalty payments increase by €5,000 for every day 5 Star fails to comply with the order for incremental penalty payments, subject to a maximum of €50,000.

What is an order on pain of a penalty payment?

An order on pain of a penalty payment is an instrument that is used to order (instruct) a company or person to perform or cease performing a certain act. If the order is not complied with within the term set, the company/person involved has to pay a sum of money. If this is the case, the AFM attempts to obtain information that is needed to perform an investigation into a possible violation.

If you have questions or complaints, please contact the AFM's Financial Markets Information Line: 0800-5400 540 (free of charge).

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

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