The Dubai Financial Services Authority (DFSA) published today a Decision Notice against Sarwa Digital Wealth Limited, a DFSA regulated and Dubai International Financial Centre incorporated company (Sarwa DIFC).
The DFSA imposed a financial penalty of USD 191,100 (AED 701,815) on Sarwa DIFC, reduced from USD 390,000 (AED 1,432,275) following mitigation and settlement discounts.
The mitigation discount included recognition of the following:
- on being advised by the DFSA that the offer of shares may have contravened DFSA law, it immediately took action to halt the share sale and arranged for the prompt return of all monies to the investors; and
- a related Sarwa entity is also being fined by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM).
The DFSA took action against Sarwa DIFC for making an Offer of Securities to the Public in or from the DIFC without an Approved Prospectus, in breach of the Markets Law.
The first email offering the sale of Sarwa Digital Wealth (BVI) Limited shares (parent company of Sarwa DIFC and Sarwa Digital Wealth (Capital) Limited based in ADGM (Sarwa ADGM)) was sent to almost 100,000 users. USD 2 million in commitments was received into an escrow account from over 150 potential investors.
The DFSA also found that Sarwa DIFC withheld financial information, that would have been included in an Approved Prospectus, and provided positive metrics that gave potential investors a misleading impression about the financial performance and position of Sarwa DIFC and Sarwa ADGM (collectively referred to as Sarwa).
Coordination with FSRA
The DFSA and the FSRA of ADGM have worked closely to make their investigations more efficient, including joint communications with Sarwa, joint interviews with Sarwa staff and others, common information requests, and the sharing of intelligence and findings. The coordination between the DFSA and the FSRA of ADGM demonstrates the value of UAE regulatory bodies working together to uphold market integrity and reduce regulatory arbitrage.
Ian Johnston, Chief Executive of the DFSA, said: “Protecting retail investors is a key priority for the DFSA and the requirement to issue a DFSA Approved Prospectus is there to do exactly that. I am also very pleased to see the effectiveness of the cooperation between the DFSA and the FSRA of ADGM."
A copy of the DFSA's Decision Notices can be found in the Regulatory Actions section of the DFSA website.
