Title: Announcement Regarding Issuance of Disciplinary Board Resolution on Violation No. (87/2018 Disciplinary Board) (132/2018 Authority)
Date Publish 07 April 2019
The Capital Markets Authority announces issuance of a Disciplinary Board Resolution passed in its meeting held on Sunday 7/4/2019 on violation No. (87/2018 Disciplinary Board) (132/2018 Authority) filed against:
1- Kuwait Finance & Investment Company.
2- Ahmed Mohammed Al Rasheed - PricewaterhouseCoopers (Al-Shatti & Co)
That is by:
“First: - Kuwait Finance & Investment Company, the first defendant: -
1. The company shall be fined KWD 2,000 for each of the first, third and fifth violations.
Second: - Ahmed Mohammed Al Rasheed - PricewaterhouseCoopers (Al-Shatti & Co.), the second defendant, shall be warned for the violations.
Third: - The concerned parties shall be notified of this Resolution."
This punishment is due to the following:
First: Violations of Kuwait Finance & Investment Company:
A- The company's non-compliance with the provisions of Article (3-2-5) of Module Five (Securities Activities and Registered Persons) 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 Authority clearly established through the job description of some of the Company’s employees that they practiced some of the Registered Employment Positions without being registered by the Company at the Capital Markets Authority, as follows:
1) An employee practiced the activity of (Representative of an Investment Advisor).
2) An employee practiced the activity of (Representative of an Investment Portfolio Manager and Representative of a Collective Investment Scheme Manager).
3) An employee practiced the activity of (Representative of an Investment Advisor).
B- The company's non-compliance with the provision of Clause (8) of Article (5-1-1) of Module Seven (Clients' Funds and Clients’ Assets):
The Company did not comply with the application of the provisions contained in the article mentioned above, despite the freezing of some portfolios.
This is the result of the completion of certain transactions on these portfolios after the freezing dates, and without providing the Authority with any evidence that the Company updated the clients’ data, owners of the above-mentioned portfolios, which indicates the absence of effective activation of the freeze situation.
C- The Company's failure to comply with Clause (2) of Article (6 - 7) of Module Fifteen (Corporate Governance):
The Authority clearly established that the Company did not appoint a director for its internal audit department. It has nominated an employee to work for the internal audit department on 14/06/2018 with the rank of "officer" and not as the director of the department, which violates the provisions of the above-mentioned statement.
Second: - The violation of Mr. Ahmed Mohammed Al Rasheed - PricewaterhouseCoopers (Al-Shatti & Co.) of Clause (4) of Article (3-4-6) of Module Five (Securities Activities and Registered Persons) of the Executive Bylaws of Law No. 7 Of 2010 and their amendments:
The Authority clearly established that he only held one meeting with the internal audit committee emerging from the Board of Directors of Kuwait Finance and Investment Company as an auditor of the Company for the financial year that ended on 31/12/2017. He was required to hold (4) periodic meetings with the Company, due to the fact that it is a listed company, to discuss the financial statements for the quarters that ended on (31/03/2017, 30/06/2017, 30/09/2017, 31/12/2017). He did not hold such meetings despite being notified by the Company of the importance of holding (4) periodic meetings with the internal audit committee mentioned above, to discuss the interim and annual financial statements in accordance with the above-mentioned clause.
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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