AFM Fines BUX €1.6 Million For Improper Use Of Financial Influencers
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The Netherlands Authority for the Financial Markets (AFM) has fined online trading platform BUX €1.6 million for paying financial influencers, or “finfluencers,” to attract new customers. The regulator found that BUX’s marketing strategy broke industry rules by using financial rewards that did not protect customers.
The AFM explained that BUX ran an “affiliate program” and a “friends program” that gave money to influencers, comparison websites, and customers who referred others to the platform.
BUX Ends Referral Payments But Questions Fairness Of Fine
The regulator said these kinds of payments are not allowed because they can push investment firms to focus on getting new customers instead looking after the interests of existing clients.
AFM stated that the rule against commission-based payments exists to make sure companies put their customers first. Without this rule, businesses might encourage people to join, even if it is not the best choice for them.
The regulator argued that by paying finfluencers, BUX motivated them to promote the platform without checking if it suited the investors they were bringing in.
The fine was issued, and BUX has since stopped paying for referrals. The company, which is now owned by Dutch bank ABN Amro, had already ended these payments before the fine was given.
BUX Chief Executive Officer Yorick Naeff confirmed that the referral program was shut down and said ABN Amro knew about the AFM’s concerns when it bought BUX.
Even though BUX followed the regulator’s orders, Naeff disagreed with the decision. He argued that the company never harmed its customers by using referrals. He also pointed out that the rule banning commissions is not very clear, which made it hard for companies to know if they were breaking it.
BUX Faces Legal Challenges And Major Business Changes
BUX first fought the fine in court, but the judge agreed with the AFM. Now, the company is thinking about whether to challenge the decision again.
Meanwhile, BUX has gone through big changes. BUX Financial Services, which was part of the company, was sold to Asseta Holding, the parent company of APM Capital, a financial firm in the UAE. This sale happened after ABN Amro bought BUX’s Dutch operations, which act as a digital broker.
BUX also had a UK branch that was controlled by the Financial Conduct Authority (FCA). This unit, called BUX Markets, offered contracts for differences (CFDs) and spread betting services. However, before the sale, BUX Markets had already shut down to rethink its business.
BUX also ran a Cyprus-based company, BUX Europe Limited, which used to offer a trading platform under the name Stryk. Before closing, it moved its customers to another trading platform called AvaTrade. Even though BUX Europe Limited no longer runs Stryk, it still has a license to operate in Cyprus.
Later, Coinbase bought BUX Europe Limited. The company, now called Coinbase Financial Services Europe, appears on the official Cyprus financial registry. This deal gave Coinbase an important license that allows it to expand its business across many European countries.
