An investigation into the deals that took place in Dubai Islamic Bank (DIB) shares on May 15 found several of them were "not in line with the rules and regulations" of the capital market laws in the UAE, a top market official told Gulf News yesterday.

He noted both the Dubai Financial Market (DFM) and Emirates Securities and Commodities Authority (Esca) have acted fast in probing the alleged insider trading in Dubai Islamic Bank (DIB) shares on May 15 and fixing the wrong-doers.

This is the first case of its kind in the UAE. Though there were unconfirmed reports that many of these deals were routed through the DIB brokerage division itself, officials declined to confirm or comment on this aspect.

According to certain brokers, even the current market price —around Dh75 per share — is very attractive, given the fact that the rights issued planned by DIB is a 'one-to-two' issue and the offer price is likely to be not more than Dh20 per share. According to sources at DIB, the bank will negotiate the premium to be charged for the rights issue with Central Bank of UAE and the final number will be announced soon.

However, an extra general meeting of the shareholders will have to give the go-ahead to this issue.

According to capital market experts, the norms for charging premium itself is a grey area. Under a Federal Decree/Ministerial law of 2000, the premium to be charged in a rights issue must be limited to 50 per cent of the face value of the share.

This instance has a recent precedent. In the case of the rights issue floated by RakBank in March, the bank had to be satisfied with Dh15 against a market price of Dh60 per share, because the face value of RakBank share is Dh10.

However, there are reports that this, along with other capital market regulations, are being reviewed.

Meanwhile a DFM press note said: "After looking into the time of declaration of the decision of the bank's board on capital increase, and after reviewing the trade on the bank's shares on May 15, and the complaints filed in this connection by some dealers... the DFM and Esca have decided that the deals concluded on that day be cancelled for violating the capital markets law."