Dubai-based investment firm fined for misleading DFSA
Investment firm and senior executive were fined $162,500 each
The Financial Markets Tribunal (FMT) has largely upheld the enforcement action taken by the Dubai Financial Services Authority (DFSA) against Dalma Capital Management Ltd and its senior executive officer Zachary Cefaratti for misleading the authority and failing to conduct Dalma’s business activities with due skill, care and diligence, it said on Tuesday.
Both the company and the executive were fined $162,500 each compared to the fines of $170,000 for Dalma and $300,000 for Cefaratti proposed by the DFSA.
Cefaratti will also be restricted from acting as the senior executive officer of Dalma for two years.
The DFSA had originally proposed orders of prohibition and restriction against Cefaratti. However, in imposing such orders, the FMT decided that they would be suspended for two years on condition that Cefaratti comply with the terms of its order during that period.
Following a four-day hearing in September 2022, on January 31, 2023, the FMT issued its decision confirming that Cefaratti and Dalma provided information to the DFSA that they knew to be false or misleading and omitted to disclose the highly relevant fact that an individual had been trading on the Dalma Unified Return Fund from April to June 2016. Cefaratti was also found to have failed to observe high standards of integrity and deal with the DFSA in an open and cooperative manner.
“Mr Cefaratti didn’t just lie to the DFSA; he continued to lie to them throughout a lengthy investigation and then he lied to the Tribunal and needlessly dragged us all through a rather expensive appeal process. He could easily have “fessed up” and exercised contrition much earlier,” the FMT said.
The process conducted by the FMT decided that, contrary to the original allegation, Dalma had not permitted trades on one of its funds to be carried out by an unqualified person during 2016 – deciding in Dalma’s favor on this matter. The FMT did find that Dalma was responsible for a relatively minor administrative infraction in relation to the employment contract of the relevant employee during the same period.
The FMT also found that the applicants had failed to provide true and complete information to the DFSA regarding this minor infraction during its investigation years later. As a result of the FMT’s investigation, the fines imposed on Dalma and Zachary Cefaratti have been substantially reduced.
Dalma has since taken measures to enhance its internal Risk and Compliance functions and is committed to pursuing the highest standards of regulatory best practices. The FMT's decision overturned the previous finding of the DFSA's Decision Making Committee (DMC) and supports Dalma's position that no harm was caused to investors and the wider public from the underlying contravention.'
- Statement from Dalma Capital