The DIFC regulator has come out with stiff action against Al Masah Capital, another affiliated business, and three senior officials. Image Credit: Gulf News Archive

Dubai: Dubai Financial Services Authority, the regulator of Dubai International Financial Centre (DIFC), is to impose fines on two firms and three individuals for violation of its regulations. These are Al Masah Capital Ltd. and Al Masah Capital Management Ltd., and the three individuals namd are Shailesh Dash, Nrupaditya Singhdeo and Don Lim Jung Chiat.

The firms and individuals have disputed the DFSA findings and referred "decision notices" to the Financial Markets Tribunal (FMT) where the parties will present their respective cases.

The DFSA said its decisions are provisional and reflect its belief as to what occurred and how it considers their conduct should be characterised. However, the final decision will be delivered by FMT.

Tough penalties

Based on its findings, DFSA decided to impose fines of $3 million (about Dh11 million) on Al Masah Capital Ltd, $1.5 million (Dh5.5 million) on Al Masah Capital Management Ltd, $225,000 on Shailesh Dash, and $150,000 each on Nruapaditya Singhdeo and Don Lim Jung Chiat.

According to a spokesperson at Al Masah Capital, "The matter is currently before the Tribunal and the DFSA's allegations are contested. Our position is that there has been no contravention of DFSA law or regulation, and the matter will be determined by the Tribunal."

Why DFSA decided to act

The DFSA has outlined the following reasons for its decision to take action against these firms and individuals.

In relation to Al Masah Capital Ltd. (a Cayman Islands registered company), which was not authorised to carry on any financial services in or from the DIFC, the DFSA found it had breached DIFC legislation by carrying on unauthorised financial services in DIFC. This was managing a collective investment fund and arranging deals in investments; making misleading or deceptive statements as to fees in documents relating to offers of units in funds managed by Al Masah Capital Ltd; making unauthorised financial promotions; and offers of units of funds in or from the DIFC.

As for Al Masah Capital Management Ltd., a firm that was authorised by the DFSA to conduct financial services business in or from the DIFC, it was found the firm had made misleading or deceptive statements as to fees in documents relating to offers of units in funds managed by Al Masah Capital Ltd., and failed to take reasonable steps to ensure that the information about fees contained in marketing materials and subscription forms was clear, fair and not misleading.

Violations by individuals

In relation to the three individuals, the DFSA found that they were knowingly concerned in the alleged contraventions by the two firms. Additionally, as Dash and Singhdeo were "authorised individuals" at the time the alleged misconduct occurred, the DFSA found that they failed to act with the standard of integrity required of them in their roles.

The DFSA further found that Singhdeo and Lim engaged in misleading and deceptive conduct by being knowingly involved in the alteration of a bank statement to conceal the payment of fees into a bank account.

Prohibition on individuals

The DFSA has decided to prohibit Dash, Singhdeo and Lim from performing any function in connection with provision of financial services in or from the DIFC, in order to maintain the integrity and reputation of the DIFC, the DFSA said in a statement.