Regulatory Challenge: German direktbroker AG meets Cyprus Leverate Financial Services Ltd

direktbroker and Leverate in Germany

The German Rafael Mueller is a director and officer of German trading-house net AG which acts as a holding company for some other companies. The group is directly connected to and markets the regulated financial instruments of Leverate Financial Services Ltd, an investment firm licensed in Cyprus by CySEC. In particular, they are operating the interlinked brands direktbroker-fx.de and direktbroker.de. Officially, the two groups are in a sort of contractual relationship only. Their only slightly mutated logos and/or brands as well as their graphical appearance and the naming suggest a very close co-operation. Leverate is controlled and managed by Israeli people with Ran Strauss, Ariel Beck, Guy Paz, and Alkis Hilton as its officers.

A German Broker empowered by Leverate

According to the information on the website of Leverate‘s broker brand www.direktbroker-fx.de, German clients are served by trading-house Broker GmbH, Berlin, a BaFin-regulated financial services company. It is a 100% subsidiary of trading-house net AG. Additionally, direktbroker-fx.de website states that direktbroker.de AG (www.direktbroker.de) is the address for customer support. Another 100% subsidiary of trading-house net AG. All companies are located at the same address in Berlin. Rafael Mueller (see his LinkedIn profile) acts as managing director and/or officer for all companies.

The design, content, and linking of the two websites direktbroker.de and direktbroker-fx.de are provided in a way that the customer must have the impression that they are one and the same provider. Officially, direktbroker.de AG acts as a sort of a non-regulated and independent broker in Germany. In fact, however, the company operates the website direktbroker.de which is interlinked with direktbroker-fx.de, the very same brand owned by Leverate Financial Services Ltd. Confusing it is, isn’t it? Intentionally?

It is clear from the domain www.direktbroker-fx.de and direktbroker.de that both sites are part of the direktbroker brand which primarily addresses the German market. From a regulatory point of view, Leverate Financial Services Ltd, direktbroker.de AG, and trading-house Broker GmbH must be regarded as a single venture.

The Finance Publication

The direktbroker group around Rafael Mueller also runs its own “Finanzzeitung für Deutschland” under the domain www.ad-hoc-news.de. The editor-in-chief is Rafael Mueller, who is also head of direktbroker.de and the associated broker brand. A slight conflict of interest?

The menu item “Disclaimer” on the publication’s website merely indicates that conflicts of interest could arise because the parent company trading-house net AG holds long or short positions in the analyzed companies. No disclosure of the close relationship with direktbroker-fx and/or direktbroker and/or Leverate is given.

The Regulatory Challenge

It would now be interesting to know how the two regulators concerned, the German BaFin and the Cypriot CySEC, view and regulate this group of companies. At the latest since the collapse of Wirecard, it should be clear to the EU regulators that a closely coordinated approach to regulation is needed to prevent further scandals and investor damage.

While Leverate Financial Services Ltd is regulated by CySEC, trading-house Broker GmbH, which handles clients for direktbroker-fx in Germany, is regulated by BaFin under IS 134461 (see link to BaFin here). The company is not allowed to act as a broker but is allowed to advise and mediate clients. direktbroker.de AG, the operator of the website direktbroker.de is not a licensed financial institution.

The operation of the regulated brand direktbroker.de is carried out by various regulated and non-regulated legal entities in different jurisdictions.

The Dark Empire PumaTS

It is a well-known fact that the Cypriot CySEC has a rather relaxed approach to regulation. Recently, this has also come up in the case of Rodeler and F1Markets. It is also known that many regulated CySEC investment firms have a shadow side to their business alongside the officially regulated brands. They use their existing human, technical and organizational resources to operate unregulated brands (i.e. scams). Recently we reported the close connection of Leverate to the scam broker network around PumaTS. In this respect, we are currently only just seeing the tip of the iceberg.

CategoriesBaFin CySEC PumaTS

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