Justice officials in the UAE have sent a strong message to anyone thinking of manipulating the UAE's capital market or the national economy, said a prominent lawyer.

A Dubai court sentenced six men charged with conducting bogus trades in the shares of Dubai Islamic Bank on the Dubai Financial Market to three years each in jail yesterday.

The Dubai Court of First Instance also fined each of the two UAE nationals and four Arab expatriates Dh1 million and ordered them to pay a similar amount in compensation to the Emirates Securities and Commodities Authority (ESCA) and Dubai Financial Market (DFM).

The expatriates will be deported after serving their prison term.

One of the four expatriates was fined an extra Dh30,000 for acting as a broker without a licence.

Speaking to Gulf News, Dr Habib Al Mulla, of Habib Al Mulla and Co consultancy firm, representing the ESCA and DFM, said: "We respect and believe in the rule of law and court rulings.

"The judgment sends a very strong signal to anyone thinking of manipulating the capital market in the UAE or of harming the national economy."

He said the court had imposed the maximum penalty under the law.

"If the defendants are willing to appeal we will be prepared for that," he said.

Samir Jafaar, one of the defence lawyers, said they would appeal. He was speaking after reading the text of the ruling and the reasoning behind the court's decision.

The case led to the cancellation of $2.6 billion in shares traded. Brokers said the trial was the first of its kind in the UAE, which is tightening the monitoring of its booming stock markets.

The Dubai Financial Market, in consultation with the ESCA, cancelled all share transactions of Dubai Islamic Bank carried out on Sunday August 28, saying a large proportion of the trades in the shares were bogus. Most of the record Dh9.35 billion worth of trades in the bank's shares were carried out by two investors, it said.

Brokers said the trades were carried out between two individuals who alternately bought and sold shares from each other in a bid to push up the price, called cross trading in market jargon.

In September, the ESCA issued a statement naming the suspects and the brokerage firm involved in the manipulated trading of Dubai Islamic Bank's shares last August.

According to the statement, the investors who concluded the deals were Rashid Bin Zayed Bin Aweidha Al Qubaisi, a minor UAE national (under the guardianship of his father Zayed Bin Aweidha Al Qubaisi) and Khalid Ahmad Majran Al Kindi, a UAE national.

Yahya Awadallah Salama, a Palestinian who was managing the accounts of Al Kindi without authorisation, was also named.

"The trades were executed through the brokerage firm Al Sharhan Stocks managed by Jubran Abdul Rahman Jubran Ajaaj, a Jordanian national and known as Zuhair Kiswani," added the ESCA statement.

During the trial one of the defence lawyers claimed his client's operations had not affected the national economy. Another said transactions should not have been halted.

Crime affects the whole economy

Dubai: A leading stock trader, who declined to be named, told Gulf News that what happened is a lesson to all those who manipulate the market.

"They have received their punishment. They are going to appeal and we will see what happens then.

"Dh1 million is not much of a fine but it should be a lesson to whoever wants to manipulate the market. They are going to be imprisoned and then deported.

"You are talking about the whole economy of the UAE and some people were attempting to create a bubble.

"In this situation some people would benefit but it would affect the whole economy.

"If you remember in 1998 (when the market crashed), the whole economy suffered, because of the consequences of the stock crash. The whole economy suffered for three years.

"We do not want to see people who manipulated the market for their own benefit not being punished."

By Arif Sharif, Staff Reporter