Regulator loses appeal as courts rule board was unlawfully formed

The Cyprus Securities and Exchange Commission (CySEC) has confirmed that the Administrative Court has annulled its decision to impose major fines on Ioannis and Amalia Vardinoyiannis, following a long-running legal battle over a 2017 market abuse ruling.

The court issued its decision on June 30, 2025, concerning joint applications 1523/2018 and 1524/2018, filed by the Vardinoyiannis siblings.

The case related to CySEC’s ruling dated November 13, 2017, which fined Ioannis Vardinoyiannis a total of €6,388,300 for breach of Article 9(1)(a) of the Market Abuse Law (116(I)/2005), in connection with the 2007 acquisition of shares in Sea Star Capital Plc.

His sister, Amalia Vardinoyiannis, was separately fined €50,000 for breach of Article 41 of the Cyprus Securities and Exchange Commission Law (73(I)/2009).

Both individuals contested the penalties, arguing procedural failings in CySEC’s handling of the case.

The Administrative Court accepted their claims and annulled the fines on the grounds that the CySEC board was not properly constituted at the time it decided to summon the two individuals to present their representations.

The court found that the board meeting in question was of material significance and deemed its composition flawed due to the participation of an improperly appointed board member.

According to publicly available court records and supporting reports, the issue of improper board formation had emerged as a recurring procedural flaw in several past cases involving CySEC decisions, raising questions about the legal standing of various enforcement actions taken during that period.

The Vardinoyiannis case, which had attracted significant attention due to the size of the fine and the profile of the individuals involved, now adds further weight to those concerns.

CySEC has yet to indicate whether it will pursue further legal action following the annulment.

Second case dismissed over unlawful CySEC board appointment

In a separate ruling, the Supreme Constitutional Court of Cyprus, in its second instance decision dated March 26, 2025, upheld a previous judgement annulling an administrative fine against Stavros Hadjikyriakos, former Executive Director of CommexFX Ltd.

The case involved a €45,000 fine issued by CySEC on February 13, 2017, for violations of article 139 of the Investment Services and Activities and Regulated Markets Law of 2007, and paragraph 9(1) of Directive DI144-2007-01 of 2012 concerning the operation of Cyprus Investment Firms (CIFs).

According to the statement, Hadjikyriakos successfully challenged the fine through application 952/2017, with the Administrative Court ruling on April 30, 2020, that CySEC’s decision was invalid due to the unlawful composition of its board at the time.

The Supreme Constitutional Court dismissed CySEC’s appeal in March 2025, agreeing with the lower court that a member of the board had been improperly appointed by the Council of Ministers, rendering the board’s composition unlawful and its decisions void.