DFSA sanctions upheld by Financial Markets Tribunal against Dr Mubashir Sheikh

Dubai: The Financial Markets Tribunal (FMT) has upheld enforcement action taken by the Dubai Financial Services Authority (DFSA) against Dr Mubashir Ahmed Sheikh for serious misconduct including misleading and deceptive behaviour.

Following a five-day hearing in April of this year, the FMT issued its decision on October 20, upholding the DFSA’s findings and imposing sanctions that include a fine of $225,000; direction that Dr Sheikh pay restitution of at least $644,836 to MAS Clearsight Ltd (MAS) representing the cash he had previously withdrawn in a deceptive way, along with interest; a prohibition from holding office in or being an employee of certain DFSA-regulated entities; and, a restriction from performing any function in connection with the provision of Financial Services in or from the DIFC.

Serious breaches

Dr Sheikh was the Chairman, Senior Executive Officer and majority beneficial owner of MAS, formerly a DFSA Authorised Firm which has been in liquidation since November 2015.

The DFSA decided to take action against Dr Sheikh for breaches of DFSA legislation.

Dr Sheikh disputed the DFSA’s findings and referred the action to the FMT for review. The FMT is a specialist tribunal, operationally independent of the DFSA, which has its own rules of procedure. The FMT conducts a full merits review of DFSA decisions that are referred to it and determines the appropriate action for the DFSA to take.

The restitution direction is the first ever imposed on an individual, and the fine is the highest imposed on an individual. In addition, the FMT ordered Dr Sheikh to pay $15,000 towards the DFSA’s costs.

The FMT said it imposed the action on Dr Sheikh because it found that he: demonstrated a lack of integrity by knowingly acting dishonestly and deceptively; knowingly provided false, misleading or deceptive information to the DFSA; and knowingly caused MAS to breach the DFSA’s prudential rules.

Key facts

FMT highlighted key facts relating to the case. In early 2015, Dr Sheikh’s company (MAS) was in an increasingly weak financial position, and required to report its financial position to the DFSA on a monthly basis, in particular as to whether it was maintaining its regulatory capital of USD600,000.

In May and June 2015, Dr Sheikh withdrew over $512,000 in cash from MAS’ bank account, depleting almost all of its liquid assets, and causing MAS to breach its regulatory capital requirement.

“By concealing his cash withdrawals and knowingly providing false information about them within MAS, Dr Sheikh knowingly caused MAS, via its Finance Officer, to misreport its regulatory capital position to the DFSA,” the DFSA said in a news release.

“The DFSA has zero tolerance for individuals who deliberately mislead and attempt to deceive the regulator, particularly where an individual takes such elaborate and dishonest steps to conceal their conduct,” said Bryan Stirewalt, Chief Executive of the DFSA.

No appeal

The FMT refused Dr Sheikh permission to appeal its decision to the DIFC Court. Dr Sheikh did not file an application to the DIFC Courts for permission to appeal against the FMT’s decision and, therefore, the FMT’s decision is final.