CMA LAW: Announcement Regarding Issuance of Disciplinary Board Resolution No. (53/2023 Disciplinary Board)- (60/2023 Authority) and imposition of a warning against each of: 1-Middle East Financial Brokerage Company, 2- Chairman and Members of the Board of Directors of Middle East Financial Brokerage Company,3- Vice Chairman of the Board of Directors of Middle East Financial Brokerage Company and Managing Director, 4- Director of the Trading Department of Middle East Financial Brokerage Company for violating the rules of Conduct of Business and Corporate Governance

Announcement Regarding Issuance of Disciplinary Board Resolution No. (53/2023 Disciplinary Board) (60/2023 Authority) and imposition of a warning against each of:

1-Middle East Financial Brokerage Company.

2- Chairman and Members of the Board of Directors of Middle East Financial Brokerage Company.

3- Vice Chairman of the Board of Directors of Middle East Financial Brokerage Company and Managing Director.

4- Director of the Trading Department of Middle East Financial Brokerage Company.

for violating the rules of Conduct of Business and Corporate Governance

For the following reasons:

First: Middle East Financial Brokerage Company, for violating the following:

1. Provision of Article (6-9) of Module Eight (Conduct of Business) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:
2. The provision of Paragraph (1) of Item (a) of (1. Telephone Conversations), and Item (a) of (4/Direct Orders (Inside the Premises of the Licensed Person) of (Second: Means of receiving clients’ orders, and mechanism of keeping them) of Appendix No. (1/ Standards of Record Keeping Systems) of Module Eight (Conduct of Business) of the Executive Bylaws of Law No. 7 of 2010 and their Amendments.
3. The Provision of Item (3) of (Third: General Requirements) of Appendix No. (1/ Standards of Record Keeping Systems) of Module Eight (Conduct of Business) of the Executive Bylaws of Law No. 7 of 2010 and their Amendments, the following was proven to the Authority:

1. The Company did not keep a sound telephone recording of client’s orders

2. Lack of telephone recordings of the orders issued by clients

3. No visual recordings of direct orders by clients (Counter Orders) from the last five years from 07/06/2022 and onwards.

4. there are no backup copies of direct orders from clients (Counter Orders) for the last five years from 07/06/2022.

Second: Each of the following:

1. Chairman of the Board of Directors of Middle East Financial Brokerage Company.

2. Vice Chairman of the Board of Directors of Middle East Financial Brokerage Company.

3. Members of the Board of Directors of Middle East Financial Brokerage Company.

It was proven that they violated the provision of Item (4) of Article (3-7) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, the Middle East Financial Brokerage Company’s Board of Directors, failed to ensure the company’s extent of commitment to “the policies and procedures of the operations department”, policies and procedures of record keeping”, and “business continuity plan” related to it.

Third: The Managing Director of Middle East Financial Brokerage Company

Provision of Item (1) of Article (3-10) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, it was proven to the Authority that the Executive Management of the Middle East Financial Brokerage Company’s failure to ensure compliance with the Company’s commitment to  “the policies and procedures of the operations department”, policies and procedures of record keeping”, and “business continuity plan” related to it according to the following:

1) The failure of the Executive Management of the Middle East Financial Brokerage Company to ensure that the Company properly maintains a number of recordings of telephone conversations and video recordings of client orders in accordance with its policies and procedures, which resulted in the Company being unable to provide the inspection team with a number of telephone recordings of client orders.

2) The failure of the Executive Management of the Middle East Financial Brokerage Company to ensure that the Company works in accordance with record-keeping policies and procedures, which resulted in an interruption in the telephone recording system that led to telephone conversations regarding clients orders not being recorded within several days.

3) The failure of the Executive Management of the Middle East Financial Brokerage Company to ensure that the Company maintains visual recordings of clients orders (Counter Orders), which resulted in the lack of visual recordings of clients orders for the last five years from the date of 07/06/2022 onwards.

Fourth: Director of the Trading Department of Middle East Financial Brokerage Company, he violated the provisions of Item No. (1) of Article (3-10) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, it was proven that the Executive Management of the Middle East Financial Brokerage Company’s failure to ensure compliance with the Company’s commitment to  “the policies and procedures of the operations department”, policies and procedures of record keeping”, and “business continuity plan” related to it.

The Resolution included the infliction of the following penalty: -

“Levying a warning on each of:

1-Middle East Financial Brokerage Company.

2- Chairman and Members of the Board of Directors of Middle East Financial Brokerage Company.

3- Vice Chairman of the Board of Directors of Middle East Financial Brokerage Company and Managing Director.

4- Director of the Trading Department of Middle East Financial Brokerage Company.

and considering it non-repetition in the future”.

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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