Arabtec chief seeks ESCA clarification on stocks ban

Dubai: The Emirates Securities and Commodities Authority (ESCA) informed Riyad Kamal, chief executive of construction company Arabtec, yesterday that he has been suspended from trading UAE-listed securities for the next six months.

ESCA, which did not give a reason for the temporary ban, questioned Kamal on selling some shares in his possession during 2009 on May 4, May 5 and May 10, just before Arabtec announced winning two projects on May 10 and on May 13, according to a statement sent out by Arabtec yesterday.

"The shares were sold at that time as part of my portfolio rebalancing. Looking at the dates of the sale of my shares in May 2009, they all happened before the announcement of good news for Arabtec," Kamal said in the statement.

After announcing the "good news" for a company, the demand for that stock rising, taking the price up with it and chances to book profits on a sale later on. In such a case, shares are bought prior to the news announcement, not sold.

Kamal said "there was no intention to benefit from the upcoming announcements [at that time]."

He also said that he is in "touch with SCA for clarification and to close this chapter."

Kamal was initially notified by a circular sent by Abu Dhabi Exchange.

A spokesman for the Abu Dhabi Securities Exchange said Kamal was suspended for "possible violations" of securities law, adding that the circular was issued by UAE market regulator Securities and Commodities Authority (SCA), according to Reuters.

Haissam Arabi, chief executive and fund manager of GulfMENA Alternative Investments said the issues shows "maturity on part of both parties."

"What's good is we have a system in place, and a regular that is overseeing the orderly trading and mechanism, and if anything out of the ordinary happens, it is flagged and dealt with.

On the other hand, Arabtec is one of those companies that have been very transparent with its dealings with investors and open with media," he said.

Arabtec shares fell 2.46 per cent on Dubai Financial Market yesterday to Dh1.98.

Arabi said the trading suspension on Kamal is part of the process to clarify the issue and should not "punish the stock."

"Implications on the stock should be limited because investors are still looking for opportunities on the stock and especially because of the clarity given on the situation by the company," he said.