The Dubai Financial Services Authority (DFSA) has fined a senior executive officer of a wealth firm for his role in “multiple serious breaches”.
Ajay Arora has received a $87,500 (£73,423, €80,924) penalty and is prohibited from holding office or being an employee of a regulated Dubai International Financial Centre (DIFC) firm.
He is also restricted from performing any functions in connection with the provision of financial services in or from the DIFC.
The Dubai regulator said Arora “executed client transactions without authorisation and engaged in misleading and deceptive conduct towards those clients and the DFSA”.
It found Arora “contravened the DFSA’s principles for authorised individuals by failing to observe high standards of integrity and fair dealing”.
Findings
Arora was senior executive officer of Morgan Gatsby since March 2013, when the DFSA granted a licence to the firm.
It offered investment banking, wealth management and corporate advisory services to high net worth individuals, family offices and small to medium-sized business in the region.
The DFSA found Arora and Morgan Gatsby “continued to engage in misconduct”, despite numerous regulator warnings.
He “did not take sufficient action to stop the misconduct or to improve the firm’s systems and controls”, the regulator said.
The watchdog found:
- Arora (on behalf of the firm) effected transactions on behalf of clients without their knowledge or authorisation;
- Arora engaged in misleading and deceptive conduct in relation to these transactions by providing false or misleading information about the transactions to the clients, or concealing the transactions from them; and
- One of the transactions was carried out despite the client having given explicit instructions to the contrary.
Company breaches
In January 2020, the DFSA imposed a $246,558 financial penalty on Morgan Gatsby for multiple serious breaches of DFSA legislation.
Furthermore, Arora “breached” DFSA legislation through his involvement in Morgan Gatsby’s:
- Illegal promotion of an unregulated foreign fund;
- Failure to comply with certain restrictions on business and dealing with property imposed by the DFSA in May 2018;
- Failure to properly classify a client and to conduct the necessary enquiries into the client’s source of funds and rationale for entering into transactions; and
- Failure to ensure that Morgan Gatsby’s directors were provided with accurate information.
The firm’s licence was withdrawn on 24 March 2020.
Settlement
The DFSA agreed to reduce the fine imposed on Arora on the grounds of financial hardship.
In addition, he agreed to settle the DFSA’s action at an early stage of the investigation and, therefore, qualified for a reduction of the fine under the the regulator’s policy for early settlement.
Were it not for the reductions for financial hardship and early settlement, the DFSA would have imposed a fine of $187,500.
Bryan Stirewalt, the chief executive of the DFSA, said: “We hold authorised individuals, particularly senior executive officers, to the highest standards of integrity in discharging their responsibilities for the management, supervision and control of an authorised firm.
“Arora did not meet these standards, even after he was repeatedly notified of compliance concerns regarding Morgan Gatsby’s activities.
“The DFSA will take strong action against individuals who breach the DFSA’s legislation, and will pursue stronger action yet where misconduct continues despite warnings.”
