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Title: Announcement Regarding Issuance of Disciplinary Board Resolution on Violation No. (58/2017 Disciplinary Board) (146/2017 Authority)
Date Publish
05 October 2017
The Capital Markets Authority announces issuance of a Disciplinary Board Resolution passed in its meeting held on Thursday 05/10/2017 on violation No. (58/2017 Disciplinary Board) (146/2017 Authority) filed against:
Al-Madina for Finance & Investment Company
Al-Madina for Finance & Investment Company
The Company shall pay KWD 1000 for each of the four violations, which are executing transactions not in accordance with Islamic Sharia, using clients’ funds for other clients’ interests, violating rules of disclosure of material information, and in its capacity as manager of the Fund, it did not notify the Authority about material events.
This punishment is due to the following violations:
1-Violating clause (3) of Article (2-2-3) of Module Five (Securities Activities and Registered Persons) of the Executive Bylaws of Law No. 7 of 2010 and their amendments. The Company performed transactions not in accordance with the provisions of Islamic Sharia, as follows:
a. Executed purchase transaction of non-Islamic shares for the interest of its clients’ portfolios, and concluded contracts of purchasing shares in the margin, during the financial year which ended on 31/12/2015, as shown in the report of Sharia Audit authority dated 22/03/2016.
b. Concluded contracts of shares in the margin during the financial year which ended on 31/12/2016 as shown in the report of Sharia Audit authority dated 12/04/2017.
a. Executed purchase transaction of non-Islamic shares for the interest of its clients’ portfolios, and concluded contracts of purchasing shares in the margin, during the financial year which ended on 31/12/2015, as shown in the report of Sharia Audit authority dated 22/03/2016.
b. Concluded contracts of shares in the margin during the financial year which ended on 31/12/2016 as shown in the report of Sharia Audit authority dated 12/04/2017.
2-Violated clause (5) of Article (5-2-1) of Module Seven (Clients’ Funds and Clients’ Assets) of the Executive Bylaws of the mentioned Law. The Company enabled some of its clients to purchase shares through their portfolios without having enough cash balance in such portfolios, as explained below:
Portfolio number: 111121
Overdraft date: 29/01/2017
Covering date: 05/02/2017
Beginning of overdraft amount: KWD 10,649
Reason of overdraft: Purchase of shares
Method of payment: Sale of shares
Other remarks: reoccurrence of portfolio overdraft for the same client in the previous report
Portfolio number: 111121
Overdraft date: 29/01/2017
Covering date: 05/02/2017
Beginning of overdraft amount: KWD 10,649
Reason of overdraft: Purchase of shares
Method of payment: Sale of shares
Other remarks: reoccurrence of portfolio overdraft for the same client in the previous report
3. Violating clauses (2,10,17) of Article (4-1-1) of Module Ten (Disclosure and Transparency) of the Executive Bylaws of the mentioned Law. The Company conducted the following:
a. It did not abide by clauses (2) and (10); it did not disclose concluding a contract of settling the resulting debt for the interest of Arab Shipping Company in the value of (KWD 3 million) on 14/04/2016, which represent 7.8% of the total assets of the Company for the year which ended on 31/12/2016.
b. It did not abide by clauses (2) and (17); the Company did not disclose on time the conclusion of the debt settlement contract of Sarh Capital Real Estate Company (Associate Company) for the interest of Gulf Bank (in its capacity as guarantor of its associate company) in the value of (KWD 4.9 millions) on 01/07/2015, which represent 12% of the Company’s total assets for the year which ended on 31/12/2015.
a. It did not abide by clauses (2) and (10); it did not disclose concluding a contract of settling the resulting debt for the interest of Arab Shipping Company in the value of (KWD 3 million) on 14/04/2016, which represent 7.8% of the total assets of the Company for the year which ended on 31/12/2016.
b. It did not abide by clauses (2) and (17); the Company did not disclose on time the conclusion of the debt settlement contract of Sarh Capital Real Estate Company (Associate Company) for the interest of Gulf Bank (in its capacity as guarantor of its associate company) in the value of (KWD 4.9 millions) on 01/07/2015, which represent 12% of the Company’s total assets for the year which ended on 31/12/2015.
4- Violating clause (13) of Article (2-14-3) of Module Thirteen (Collective Investment Schemes) of the Executive Bylaws of the mentioned Law. The Company, in its capacity as manager of the mentioned Fund, did not report the court order for the interest of one of the unit holders in the value of KWD 98,138, which negatively affected the liquidity of the Fund, and eventually the Fund’s manager had to sell some assets to pay for such amount.
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 rules 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.
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