Dubai: A UAE expatriate has been barred from offering wealth management services to investors in Dubai after he was found to have fabricated a client’s net worth and made unauthorised investments.
The Dubai Financial Services Authority (DFSA) said on Wednesday that it has imposed a restriction on A.M., a former relationship manager of a company at the Dubai International Financial Centre (DIFC).
The financial regulatory body said that in July 2018, A.M. jacked up the actual value of net assets of a client from $7 million to $14 million, purportedly for the purpose of obtaining a visa.
Between June 2016 and July 2018, he also allegedly entered into 17 investments, with a subscription value of $143 million, and secured three loans on behalf of another customer without proper consent.
He also fabricated account statements in the process, in order to conceal the unauthorised transactions from the client.
“The DFSA found that Mr. (A.M.) lacked integrity for producing inaccurate information regarding the amount of a client’s total net assets and for making unauthorized investments for another client that he attempted to conceal,” the regulatory authority said.
“The DFSA concluded that Mr. (A.M.) is not fit and proper and restricted him from being involved in providing financial services in or from the Dubai International Financial Centre (DIFC).”
“The DFSA additionally found, that over two years, Mr (A.M.) made unauthorised investments for another client without disclosing them to the client. He also copied the client's signatures on certain investment documents without permission and falsified account statements to conceal the unauthorised investments.”
The company that A.M. worked for was not aware about the alleged misconduct at the time it occurred. However, the employer took appropriate action after discovering it and alerted the DFSA.
A.M. was employed by the company in DIFC as a relationship manager from September 24, 2009 until he was dismissed on August 27, 2018.
Bryan Stirewalt, chief executive of the DFSA, said that the regulatory agency expects the staff of authorised companies at DIFC “to act with integrity when performing their duties, especially senior relationship managers.”
“The DFSA will not tolerate such misleading conduct by persons working in the financial services industry in the DIFC.”
Background
In July 2018, A.M. sent two reference letters stating that his client’s total assets were approximately $14 million. Both documents were signed by A.M. and showed the logo of the company he worked for.
According to the DFSA, the figure mentioned in the documents were incorrect. “[It] did not take into account the amount owed by the client to [A.M.’s company] pursuant to the loans taken out." The correct value of total net assets was approximately $7 million.
The relationship manager reportedly knew that the total net assets figure was bloated and when he was asked about it, he said he was doing it only because he wanted to assure his client that his investments were “still performing.”
He subsequently changed his statement and said that he provided the misinformation at the request of his client “who needed assistance with obtaining a visa.” “In any case, the information was incorrect,” the DFSA said.
Between June 2016 and July 26, 2018, the finance professional also entered into 17 investments and three associated loans on behalf of another customer, without prior consent or authorisation.
He allegedly copied the client’s signature onto the investment term sheets and provided the client “false account statements” in order to hide the unauthorised transactions.
The value of subscription for the 17 unauthorised investments was $143.9 million.
However, the DFSA also found out that the customer “did not make any loss” as a result of the transactions.
When asked why he did the unauthorised investments, the relationship manager said he was only “trying to recover a loss suffered” by the same customer.
“He planned to tell [the client] about the unauthorised investments once the loss had been recovered,” said the DFSA.
