CmaBoardReleases
Title: Announcement Regarding Issuance of Disciplinary Board Resolution on Violation No. (6/2018 Disciplinary Board) (15/2018 Authority)
Announcement Regarding Issuance of Disciplinary Board Resolution on Violation No. (6/2018 Disciplinary Board) (15/2018 Authority)
The Capital Markets Authority announces issuance of a Disciplinary Board Resolution passed in its meeting held on Thursday 15/3/2018 on violation No. (6/2018 Disciplinary Board) (15/2018 Authority) filed against:
Aref Investment Group
"The company shall be fined KWD1,000 for each of the three violations assigned to it for encroachment of the risk management systems in the preparation of the report and assigning valuation of an asset to a non-independent entity that has a conflict of interest and not obtaining the necessary data for two of its clients."
This penalty is due to the following violations:
1. The provisions of Article (4.4) of Module Six (Policies & Procedures of Licensed Persons) of the Executive Bylaws of Law No. 7 of 2010 and their amendments. According to reports prepared by KPMG, it did not mention the risks resulting from the claims of the Zakat Authority in the Kingdom of Saudi Arabia to its subsidiary (Munshaat Real Estate Projects Company) with a value of KWD 153 million, and did not address the demand of one of the contractors working with one of its subsidiary companies worth KWD 41 million. Additionally, the Kingdom of Morocco issued a decision to dispose of one of the properties of its subsidiaries in Morocco, and whether those claims had resulted in any encroachment of risk management systems, nor to explain the procedures to be followed to deal with those claims.
2. The provisions of item (d) of Appendix (1) of Module Eleven (Dealing in Securities) of the Executive Bylaws of Law No. 7 of 2010 and their amendments. It valuated one of its real estates (Almanqaf property: Two Buildings) prepared in November and December 2016 by Kuwait Finance House, which is considered one of the one of the largest owners of Aref Investment Group (almost 54% ownership), which negates the principle of independence required between the applicant and the evaluators, as well as the possibility of suspected occurrence of conflict of interest.
3. Contrary to the provisions of Article (3-5) of Module Sixteen (Anti-Money Laundering and Combating Financing of Terrorism) of the Executive Bylaws of Law No. 7 of 2010 and their amendments. It did not obtain a number of statements concerning the two clients mentioned below, although they are the two sole clients of the company:
1)
Client's name: Lamar Holding Company
Clients type: corporate entity
Investment portfolio management mechanism: Portfolio for safekeeping
Notes:
Lack of investment objective
Not being authorized to sign
Lack of civil IDs
Non-availability of signatories
2)
Client's name: Saham Holding Company
Clients type: corporate entity
Investment portfolio management mechanism: Investment portfolio managed by the client
Notes:
Lack of investment objective
Not being authorized to sign
Lack of civil cards
Non-availability of signatories
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.