Title: Announcement Regarding Issuance of Disciplinary Board Resolution No. (46/2021 Disciplinary Board) (41/2021 Authority) and imposition of a fine of eight thousand Dinars against Securities Group Company for violating Articles of Module Seven (Clients’ Funds and Clients’ Assets)

Announcement Regarding Issuance of Disciplinary Board Resolution No. (46/2021 Disciplinary Board) (41/2021 Authority) and imposition of a fine of eight thousand Dinars against Securities Group Company for violating Articles of Module Seven (Clients’ Funds and Clients’ Assets)

For the following reasons:

First: Provision of Article (2-1) of Module Seven (Client’s Funds and Clients’ Assets) of the Executive Bylaws of Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and their amendments:

On 03/11/2020, the Company transferred an amount of KD 375,000. (Three hundred seventy-five thousand Kuwaiti Dinars) from the bank account of portfolios’ clients to the bank account of the Company, without providing proof of its entitlement of these funds.

Second: Provision of Article (2-3) of Module Seven (Client’s Funds and Clients’ Assets) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

The Company failed to keep accurate records showing the reason for the mismatch of the cash balance of clients’ portfolios in the Company’s records with the cash balances of clients’ portfolios deposited in the bank and the cash balance with Kuwait Clearing Company.

Third: Provision of item (a, b, c, e) of Item (2) of Article (5-3-1) of Module Seven (Client’s Funds and Clients’ Assets) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

The Company failed to notify some portfolios’ clients of Company, based on the sample of clients that were reviewed during the inspection period, of matters related to the securities they own.

Fourth: Provision of Items (1) and (2) of Article (4-4) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and their amendments:

The Nomination and Remuneration Committee of the Company did not do the following:

1- Include the Company's nomination and remuneration structure, particularly what is related to members of the board of directors and executive management.

2- Failure to mention the details of the remunerations granted to the executive management, whether they are amounts, benefits or advantages, and only stating the total amounts that were granted, in the report presented to the General Assembly for the year ending 31/03/2020.

The Company failed to explain or justify the reason for its non-compliance with the aforementioned Article in the governance report sent to the Authority, and which was presented to the General Assembly, as stipulated in Article (1-1) of the aforementioned module, “………………, the  company  must  specify  the  non-complied  rule  and  principle,  and  include  the  same  in  detail  in  the  governance  report, along with the reasons for non-compliance. All this shall be done without prejudicing the obligatory provisions and stipulations stated in the Law and these Bylaws or any other law or condition or rules, instructions or resolutions.

The Resolution included the infliction of the following penalty: -

“First: - The violating Company is fined an amount of five thousand Dinars , and making it an ongoing monthly fine, starting from October 1, 2021 until the violation is fully rectified for the first violation. 

Second: The violating Company is fined an amount of one thousand Dinars for each of the other attributed violations.”

In this regard, the CMA emphasizes the implementation of CMA Law and its Executive Bylaws on all persons dealing in securities activities, and urges them to comply with these Laws in order to promote investors' confidence, create a sound investment environment, and implement the Law according to the principles of fairness, transparency, and integrity in line with the best international practice.