Capital Group has issued a stern warning to people, within its hierarchy, planning to invest in Initial Coin Offerings. The 87-year old investment management firm has banned all its associates, as well as their immediate family members, from engaging in any form of ICO investing.
Capital Group ICOs Ban
In a regulatory filing with the Securities and Exchange Commission, the financial services firm has detailed a new Code of Ethics and guidelines that its associates will have to follow. According to the firm, associates are required to maintain the highest ethical standards when conducting business, regardless of their being lesser standards in the industry.
All associates are also required to place the interest of the fund shareholders as well as clients first, according to the new code of ethics. Associates taking part in ICOs could create a conflict of interest as far as the firm is concerned.
“Capital’s Code of Ethics requires that all associates: (1) act with integrity, competence and in an ethical manner; (2) comply with applicable U.S. federal securities laws, as well as all other applicable laws, rules, and regulations; and (3) promptly report violations of the Code of Ethics,” Capital Group in regulatory filing.
Failure to comply with the detailed regulations according to the firm will result in disciplinary action which could lead to termination.
Capital Group says it will make rare exceptions with regards to IPOs. However, they will also have to undergo scrutiny and analyzed on a case by case basis. No exception will be given to anything pertaining to ICO. The Code of Ethics however does not indicate whether Capital Group plans to invest in ICOs on behalf of its clients.
Just like Capital Group, The South Korean Government has banned public officials from holding or trading any form of digital currency. According to the government, officials engaging in any form cryptocurrency related activities are in violation of the prohibition of forbearance obligation.
A crackdown on ICO related activities by various authorities and corporations does not come as a surprise. A study carried out by Satis Group has shown that 81% of ICOs carried out last year, have already collapsed.
Capital Group’s tough stance on ICOs comes at a time when the Securities and Exchange Commission is believed to be planning to examine over 100 Hedge Funds. The probe seeks to ascertain how the firms are operating with regards to Cryptocurrencies investments.
The regulator seeks to find out whether the cryptocurrency assets bought by the funds match those advertised in offering statements.