Finansinspektionen (FI) is withdrawing the authorisation of securities company Nord Fondkommision AB (Nord) due to severe deficiencies in the company’s advisory activities and other areas. This decision means that the company must cease all regulated activities. As a result, it may no longer provide financial advice or sell financial products. The decision will be presented by FI Director General Erik Thedéen and Chief Legal Counsel Eric Leijonram at a press conference today, Wednesday, 13 October, at 10:00 AM.
Time and date: Wednesday, 13 October, 10:00 AM
Location: Finansinspektionen, Brunnsgatan 3, Stockholm
The press conference is only for representatives from the media, but it will be broadcast live on FI's website.
Nord is a securities company whose operations consist primarily of advice related to and distribution of financial instruments to consumers, largely through tied agents. The company has around 30 employees and 50 tied agents.
Securities companies are obligated to demonstrate a duty of care for their customers. This is a central obligation under which advisors must always start with what is best for the customer and adapt the advice and choice of products to the needs, knowledge and comprehension of the customer.
FI's investigation shows that Nord has failed in its duty of care for customers in a severe and consistent manner. For example, Nord advised customers to invest in high-risk corporate bonds without ensuring that the customer has the necessary knowledge and experience to be able to understand the risks associated with these products. Nord also received remuneration from the issuers of these corporate bonds (third-party remuneration) without following the strict rules that apply to receive such remuneration. The customers have not been informed about the conflict of interest that subsequently arises.
The investigation also shows that Nord has had major deficiencies in its internal governance and control. For example, the Board of Directors has not ensured that the compliance function has had sufficient resources or acted on the deficiencies that were identified.
"FI has chosen to withdraw the firm's authorisation due to major systemic deficiencies in the advice it gives to its customers," says FI's Director General Erik Thedéen. "This is a clear example of dishonest advice that drives sales that are beneficial for the company itself instead of what is good for the customer."
FI is withdrawing the authorisation immediately. Nord's business activities will be discontinued in an orderly manner.
Nord must now contact all of its customers to describe how its business activities will be discontinued.
FI's Board of Directors decided on the sanction on 12 October.