Saxo Bank Fined €1.6 Million for BinckBank Violations

Saxo Bank fined €1.6 million by AFM for violations related to BinckBank’s asset segregation and customer treatment.

Key Points:

• Regulatory violations: The AFM fined Saxo Bank €1.6 million for breaching asset segregation, risk management, and customer treatment rules, risking investors’ security.
• Customer service failures: Customers experienced delays, high costs, and poor support during the transition from BinckBank to Saxo Bank.

The Netherlands Authority for the Financial Markets (AFM) has imposed three substantial fines totaling €1.6 million on Saxo Bank A/S following serious violations tied to its 2019 acquisition of BinckBank N.V. The penalties stem from an investigation into BinckBank’s practices from 1 January 2021 to 11 April 2023. The AFM’s inquiry revealed multiple breaches involving asset segregation, risk management, and customer treatment during BinckBank’s migration to Saxo Bank.

The AFM’s investigation, triggered by customer complaints and a report from BinckBank’s accountant, uncovered significant administrative failures. Customers had raised concerns on review websites and in the media about delayed transactions, incorrect charges, and missing shares. These issues indicated a lack of oversight, improper handling of investment portfolios, and inadequate risk management, which exposed investors to unnecessary risks.

Saxo Bank Fined €1.6 Million for BinckBank Violations

The AFM deemed the violations severe, damaging investor confidence and leaving clients vulnerable. The AFM imposed the fines on Saxo Bank, the legal successor to BinckBank, after finding that BinckBank failed to meet several regulatory standards during its transition to Saxo Bank.

The fines are as follows:

• €500,000 fine for serious shortcomings in the administration of investment portfolios. BinckBank violated asset segregation rules, causing uncertainty regarding the ownership of investments. This failure heightened the risk for investors in the event of bankruptcy and raised concerns that BinckBank could have lent securities without customers’ consent.
• €500,000 fine for insufficient control over business processes that should have mitigated risks to investors’ funds. Key checks were delayed, ineffective, or neglected altogether, undermining the protection of investors’ interests.
• €600,000 fine for inadequate customer treatment, particularly surrounding the migration period. Customers faced transaction delays, excessive charges, and complications when transferring their portfolios to other brokers. Communication was often poor, with many customers unable to resolve issues due to unresponsive or misleading customer service.

The AFM’s investigation also revealed that the problems were not limited to BinckBank’s clients. Other banks and brokers faced operational disruptions due to the issues, highlighting the far-reaching impact of the failures.

Despite the severity of the violations, Saxo Bank did not contest the fines. As a result, the penalties became irrevocable on 25 December 2024.

The AFM’s action underscores the critical importance of robust regulatory compliance, particularly in safeguarding investors’ assets and ensuring they receive fair and transparent treatment. The authority has clarified that financial institutions must be held accountable for any lapses that could harm consumers and undermine market confidence.

Saxo Bank’s failure to address these issues promptly and adequately has left both individual investors and the broader financial sector grappling with the aftermath.

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