In connection with signals submitted in the Bulgarian Financial Supervision Commission (BFSC) and regarding numerous publications for providing investment services and activities, including through electronic platforms for trading and financial instruments, from companies which are not licensed by the BFSC to operate as investment intermediaries, the BFSC would like to notify the investors about the following:

The companies listed below are not licensed by the BFSC and hence they are not eligible to provide investment services and activities under the Markets in Financial Instruments Act in the territory of the Republic of Bulgaria, including through electronic platforms for trading with financial instruments:

– InstaForex, Russia
– Insta Sofia Ltd.

We would like also to inform the potential investors that the investment services and activities can be provided only by companies licensed by the BFSC to act as an investment intermediaries, banks licensed by the Bulgarian National Bank and entered in the register of the BFSC as investment intermediaries, investment intermediaries from member states under the freedom to provide of services rules through a branch in the Republic of Bulgaria.

Regarding the activity of management of portfolios of financial instruments and bankroll, except the aforementioned companies, authorized to carry out this activity are companies licensed to operate as a management company or a management company from a member state.

The investors are advised to check whether the respective company is licensed by the BFSC and if it is authorized, in accordance to the issued license, to provide investment services and activities to the clients.

List of investment intermediaries and management companies licensed by the BFSC could be found on the FSC’s website at:
http://www.fsc.bg/Lists-of-supervised-entities-en-148

List of investment intermediaries from EU member states notified the BFSC for their intention to provide services and activities on the territory of the Republic of Bulgaria could be found on the follow link:
http://www.fsc.bg/Notifications-en-111

The investors should consider that the contracting and submission of orders, including the provision of funds for concluding transactions with financial instruments using the services of companies that are not licensed by the BFSC or by the competent authority of another member state, might lead the potential investors to deception and significant financial losses.

The financial assets and funds provided by the investors to the companies which are not licensed and therefore supervised by BFSC are not guaranteed by the Investor Compensation Fund.

The Deputy Chairman of the Financial Supervision Commission (FSC), in charge of Investment Supervision Division has decided to execute a Coercive Administrative Procedure under article 118, paragraph 1, p. 1 and p. 4 from the Markets in Financial Instruments Act against BULGARIAN STOCK EXCHANGE – SOFIA JSC for the following:

 Oblige the BULGARIAN STOCK EXCHANGE – SOFIA JSC to hereby undertake the necessary actions, immediately, as a result from which, within an hour of receipt of this notice, to stop the trading of shares, emission ISIN BG1100028080, issued by MOUNTAIN PARADISE INVEST REIT (“Маунтин Парадайс Инвест” АДСИЦ) allowed to be traded as of this moment as a segment of the regulated market.”

The motives for this administrative procedure are as follows:

Thе legislation does not foresee for a legal mechanism for changing MOUNTAIN PARADISE INVEST REIT’s activities or for its conversion into another type of company. At the same time the license of the entity as a special purpose vehicle has been revoked, consequently it has no longer right to undertake the activities subject to its license. In this connection, MOUNTAIN PARADISE INVEST REIT has no longer legal and factual right to execute its investment goals, stated in its prospectus, namely to acquire investment properties, realize capital gains from their sale or lease, and to insure current income for the shareholders. The only legal possibility in the current situation is its liquidation.

On the other hand, following the decision of FSC dated 05.12.2012 for the revoking of MOUNTAIN PARADISE INVEST REIT’ license, the shares of the company, traded on the regulated market, organized by the BULGARIAN STOCK EXCHANGE – SOFIA JSC, are being traded actively. Following the date the license was revoked, the shares issued by MOUNTAIN PARADISE INVEST REIT, have been traded at a price much higher than their net book value as per their latest published financial statements.

The described actual situation creates conditions for destabilization of the market, which generates turnover on sales of shares in which prices frequently exceed their balance values. All this factors, taken together with the lack of perspectives for future development has threatened the interests of investors.

The prohibition of the trade on regulated market with financial instruments, issued by MOUNTAIN PARADISE INVEST REIT is necessary in order to preventively protect the interests of the investors. Therefore, it is necessary that the change of the shareholding structure of the company through deals on regulated market to be prohibited. Such deals presume that the company corresponds to definitive criteria, in relation to which it was allowed to be traded on this market, however, at the moment it does not comply with the requirements.

The initiation of the recent proceeding of Coercive Administrative Measure refers to provision of stability of the financial market and the prevention of significant unexpected financial losses from the side of the participants and the necessity of preventive protection of the investors’ interests.

The interested parties may present to FSC explanations and/or objections under the initiated proceeding until January 7, 2013.