Licences revoked for M. Čiuželis and the MC Wealth Management, UAB firm under his leadership for illegal provision of investment services

The investigation regarding the operations of the financial advisory firm MC Wealth Management, UAB was only commenced by the Supervision Service of the Bank of Lithuania after the persons who had incurred losses in using the services provided by the MC Wealth Management, UAB applied to the Bank of Lithuania. 

During this investigation it was identified that the MC Wealth Management, UAB provided portfolio management services that it, in the capacity of a financial advisory firm, did not have the right to provide whatsoever.  Thereby customers were provided with a false impression that the investment services were provided by the entity holding the necessary licence.  By these actions the firm has violated one of the fundamental requirements of legal acts — the duty to have a licence entitling to the provision of respective investment services.

Moreover, MC Wealth Management, UAB has overstepped the boundaries provided by the licence of a financial advisory firm: the firm would transfer customers’ orders to collective investment undertakings with regard to which it had no right to provide services and although the firm only had the right to provide such orders for collective investment undertakings established in EU or European Economic Area member states, during the investigation it was ascertained that it would transfer customers’ orders to collective investment undertakings registered by the supervisory authorities of the island of Guernsey, Bermuda, Cayman Islands and British Virgin Islands.     

The Supervision Service’s investigation also revealed that the firm provided to its customers investment services (portfolio management, provision of investment recommendations as well as reception and transmission of orders) regarding unsuitable financial instruments. Financial instruments did not meet customers’ investment objectives, risk tolerance limits and customers’ knowledge and experience in the field of investment. In addition, in the provision of investment services by the firm, customers without specific knowledge and experience invested in collective investment undertakings designated for professional or well‑informed investors. 

MC Wealth Management, UAB improperly managed conflicts of interest arising between it and its customers. The firm did not reveal to its customers the fact that it derived income from the distribution of collective investment undertakings to its customers. The size of income derived by the MC Wealth Management, UAB depended on the investment in the above-named collective investment undertakings and therefore the selection of financial instruments to customers was probably determined by the MC Wealth Management, UAB direct interest to derive financial benefit from the corresponding issuers or distributors of financial instruments. Such practice virtually denies the principles of the operating model of a financial advisory firm, as seeking to provide objective advice to customers.  

It should be noted that enforcement measures were already applied to Marius Čiuželis before — in 2002, the Lithuanian Securities Commission decided to re-attest Marius Čiuželis for violations related to unfair, careless, unprofessional and imprudent actions with regard to customers. 

Once the Bank of Lithuania revoked the MC Wealth Management, UAB its licence of a financial advisory firm, this firm was deprived of the right to provide investment services.

Supervision of financial market participants, Financial adviser companies