Scam alert: Sharjah Police warn young investors of latest fraud

Dubai: Police are warning residents not to fall for the latest scam that has been doing the rounds on social media.

Commander-in-Chief of Sharjah Police Maj. Gen. Saif Al Zari Al Shamsi warned investors, especially young people, to always verify the authenticity of financial investment companies and to check whether they have a valid trade licence to conduct business in the UAE.

“There are fake companies that exploit the funds of a large group of citizens and residents, and encourage them to make investments in various sectors,” said Maj. Gen. Al Shamsi, who also urged affected residents to come forward and lodge a complaint with police.

“Once a police report is issued, we will exert all out efforts to minimize the victim's loss in investment fraud,” he said.

Maj. Gen. Al Shamsi explained that the UAE has clear guidelines and regulations on companies that trade in the stock market, and said that “the victims of the scam had no clue as to the location of the company’s imaginary headquarters”.

“Falling into the trap of investing in fictitious companies can lead to financial and legal consequences, as well as personal and family problems,” he said, noting that a large number of Emirati youth have become a victim of such scams.

He added that the victims included people with a limited income, who fell heavily in debt after obtaining bank loans in order to fund their investments.

The Rules

The UAE Securities and Commodities Authority (SCA), which is responsible for monitoring the Dubai Financial Market (DFM), the Abu Dhabi Securities Exchange (ADX) and the Dubai Gold and Commodities Exchange (DGCX), has issued clear guidelines to regulate brokers and investments.

According to the SCA:

No broker may practice the Brokerage Profession unless he has been issued with a license to do so by Authority. Any party entered upon the register with the Authority may submit an application to any Market for a license for it to practice the Profession. The Market shall have discretion to approve or reject the application.

As soon as it approves the listing of any particular Securities, the regulatory body shall:

Source: Securities and Commodities Authority