By Ben Flanagan and Reuters
A second UAE regulator will examine allegations of share price manipulation made against Dubai's largest investment bank.
The Dubai Financial Services Authority (DFSA) is looking into allegations that Shuaa Capital, Dubai's largest investment bank, manipulated the price of a share purchase in Kuwait's Al-Ahlia Investment Co.
The DFSA - which regulates the Dubai International Financial Centre (DIFC) - is in touch with authorities in Kuwait and the UAE over allegations made by the Paris-based Trends magazine. Shuaa has two units - Shuaa Partners Ltd and Shuaa Capital International Ltd - with licenses to operate in the DIFC.
Trends magazine alleged that Shuaa had entered into an undisclosed agreement with the Ahlia Investment for a refund of part of the 25.8 million dinar ($89.21 million) purchase price of the stake.
Under the terms of the deal, Shuaa agreed to buy the Ahlia stake at 410 fils per share, Trends said. The purchase price announced was 480 fils per share, which Shuaa paid. Ahlia then refunded the difference, the magazine alleged.
The DFSA interest follows news that the Emirates Securities & Commodities Authority (ESCA), which regulates domestic markets, is discussing the allegations with Shuaa and would approach market authorities in Kuwait. The Kuwait Stock Exchange is also looking into the issue, according to today's Gulf News.
Shuaa Capital today held a press conference in which its CEO Iyad Duwaji dismissed two articles in Trends as ‘sensationalising and misrepresenting various facts,' confirming that Shuaa is taking legal action against the publisher.
"The implications of impropriety are false, including the implication of price manipulation," he told reporters.
However, Duwaji did not specifically deny the key allegation regarding the difference in the price paid, and the price that was announced. He would only say that no party had "benefited unduly from this action."
I applaud Trend Mag. and Arabial Business for publishing such investigative reporting. Its high time un-ethical practices and deals are exposed. Investors need to have trust and confidance in the regulatory authority to investigate and take sever action against those who try to break the rules of the game, and blemish the reputation of the UAE as an credible global financial center.