Saxo Bank has been fined €1.6 million by the Netherlands Authority for the Financial Markets (AFM) for violations committed by BinckBank, which Saxo acquired and later merged into its operations. The violations include failures in asset segregation, risk management, and customer treatment. Saxo Bank, as BinckBank’s legal successor, has accepted responsibility and will not contest the penalty.
Background on the Merger
Saxo Bank finalized its acquisition of BinckBank, an online investment platform, in 2019, completing their merger last year. The AFM announced the fine on Tuesday, citing Saxo Bank’s accountability for breaches that occurred during BinckBank’s operations under Saxo’s ownership.
Meanwhile, Saxo Bank is reportedly evaluating acquisition offers after unsuccessful attempts to go public. Potential buyers include Altor Equity Partners, Centerbridge Partners, and Interactive Brokers Group.
Details of the Violations
The AFM investigation revealed that BinckBank failed to uphold key regulatory standards between January 1, 2021, and April 11, 2023. These lapses involved:
- Asset segregation: Failure to ensure proper separation of client assets.
- Risk management: Insufficient oversight of business processes.
- Customer treatment: Failing to address client complaints and errors adequately.
These violations, deemed “very serious” by the regulator, exposed investors to significant risks and eroded confidence in the platform.
Customer complaints during this period included transaction delays, inaccurate charges, and difficulties in locating shares. The investigation also found that the platform lacked proper investment portfolio records and failed to prioritize customer interests in its operations.
AFM’s Findings and Penalties
The AFM launched its investigation in 2022 after receiving consumer complaints and a critical report from BinckBank’s auditor. Based on its findings, the regulator imposed three administrative penalties on Saxo Bank:
- €500,000 for inadequate maintenance of investment portfolio records.
- €500,000 for insufficient oversight of business operations.
- €600,000 for failing to provide adequate customer support.
These issues led to uncertainties regarding ownership of investments and funds, delayed portfolio transfers, transaction errors, and overcharges for costs and taxes. Customers attempting to switch brokers encountered significant delays in transferring their portfolios.
Statement from the AFM
“Investors must have confidence that their assets are secure,” said Jos Heuvelman, Director at the AFM. “At BinckBank, this trust was undermined by administrative and operational failings. It is unacceptable that customers faced such risks and received inadequate support for their complaints.”
This case highlights the importance of regulatory compliance in maintaining investor trust, particularly during significant corporate transitions such as mergers and acquisitions.
