Title: Announcement regarding issuance of Disciplinary Board Resolution No. (20/2025 Disciplinary Board) (18/2025 Authority) and imposition of a fine against: Sharq Investment Company for violating the Rules of Conduct of Business and Clients’ Funds and Clients’ Assets

Announcement regarding issuance of Disciplinary Board Resolution No. (20/2025 Disciplinary Board) (18/2025 Authority) and imposition of a fine against: Sharq Investment Company for violating the Rules of Conduct of Business and Clients’ Funds and Clients’ Assets.

For the following reasons:

1- The provision of Items (1 and 2) of Article (4-1) of Module Eight (Conduct of Business) of the Executive Bylaws of Law No. 7 of 2010 and their amendments: 

It was proven to the CMA that Sharq Investment Company did not establish any adequate arrangements to limit cases of conflicts of interest between the Company’s clients and its employees’ transactions to ensure that the information of these portfolios’ transactions was not exploited. It was proven that many employees of the Company have disclosed to the Compliance Officer their execution of sale and purchase transactions on the shares of subsidiary companies to the clients of Sharq Investment Company.

2- The provision of Items (3) of Article (4-3) of Module Eight (Conduct of Business) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

It was proven to the CMA that purchase and sale transactions were executed on the shares of subsidiary companies to the clients of Sharq Investment Company, for Mr. … through his electronic account, even though he is an employee at Sharq Investment Company who is responsible for managing the clients’ account of the portfolios managed by the clients at the Company.

In addition, the employees repeatedly executed transactions on the same shares that their clients deal with, which proves that Sharq Investment Company has not defined a periodically updated list of Securities that should not be dealt with by its employees.

3- The provision of Item (7) of Article (5-1-8) of Module Seven (Clients’ Funds and Clients’ Assets) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

It was proven to the CMA that Sharq Investment Company has executed transactions in respect of the client that owns the portfolio (portfolio managed by the company) on the shares of a company applicable to the practices and purposes prohibited by the Item mentioned above through making unnecessary sale and purchase transactions at close prices, and at times the sale price is less that the purchase price, during the period from 01/10/2024 to 17/02/2025.

4- The provision of Item (2) of Article (6-5) of Module Eight (Conduct of Business) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

5- The provision of Article (6-9) of Module Eight (Conduct of Business) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

It was proven to the CMA that Sharq Investment Company did not take the necessary steps to record telephone conversations with a company to execute sale and purchase orders on the shares of listed companies in Boursa Kuwait for its clients during the period from 01/10/2024 to 23/02/2025.

6- The provision of Item (5) of (Second: Means of receiving clients’ orders, and mechanisms of keeping them) of Appendix 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:

It was proven to the CMA that Sharq Investment Company did not submit copies of the written orders received from its clients on the sale and purchase orders of shares for them; however, the documents submitted by the Company to the inspection team on this regard were letters of order forms whose information will be filled by the Company without submitting copies of any written orders received from the clients and include the information set forth in Paragraph (b) of Item (5) previously mentioned. In addition, the documents submitted by the Company did not include name and capacity of the order issuer with respect to its legal clients, and the sequence of the forms mentioned above was inaccurate in terms of the time received by the Company.

7- The provision of Item (1) of (Third: General Requirements) of Appendix 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:

It was proven to the CMA that the policy of keeping the official documents of Sharq Investment Company and the clients submitted by the Company does not regulate the mechanism of keeping the clients orders as per the provisions of Appendix 1 of Module Eight (Conduct of Business).

The Resolution included the infliction of the following penalty: -
“Levying a fine on Sharq Investment Company in the amount of KWD 10,000 (ten thousand Dinars) for the first and second violations due to correlation, and the amount of KWD 5,000 (five thousand Dinars) for the third violation, and the amount of KWD 3,000 (three thousand Dinars for the fourth, fifth, and sixth attributed violations due to correlation.”

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.