On 4 February 2019, the Dubai Financial Services Authority (DFSA), the independent regulator of financial services conducted in or from the Dubai International Financial Centre (DIFC), announced the suspension of the licence of Morgan Gatsby Limited (MGL) for a period of 12 months, consistent with its aim to protect direct and indirect users of the financial services industry in the DIFC.
DFSA stated that MGL’s licence was suspended due to serious concerns related to the adequacy of its human and financial resources, its non-compliance with DFSA rulebook requirements, and its failure to deal with the DFSA in an open and cooperative manner.
Neither MGL nor Essel Group ME (“EGME”), owners of MGL, could be reached for comment for failure to pick up the phone.
But AMEinfo did ask DFSA to provide more details about the issue and in a statement, DFSA responded to the following questions:
AMEinfo: What prompted the investigation to begin with, what are the main infractions that prompted the suspension and did company violations cause clients to lose asset investments, cash or property?
DFSA: All pertinent details regarding the DFSA’s decision to take this action are explained in the Media Release and the Decision Notice, both of which are published on our website.
see for the Morgan Gatsby case, see https://www.dfsa.ae/getattachment/2516b110-9371-44e1-9e7d-8e911b7584bf/attachment
The DFSA carries out its activities in confidence. The DFSA, therefore, does not publish information about the commencement, conduct, or conclusion of any of its investigations. However, where the DFSA’s investigations result in action taken by the DFSA, details of these actions are published on our website.
AMEinfo: What other financial investigations are underway?
DFSA: As stated above, all DFSA investigations are confidential. The DFSA, therefore, does not provide information on the number or type of investigations that it is carrying out.
AMEinfo: How were previous financial cases handled? (settlements, licenses revoked, etc.)
DFSA: All of the DFSA’s Enforcement actions are published on our website – www.dfsa.ae
The DFSA has a number of actions that it can take and sanctions that it can impose including but not limited to imposing fines, censures, and also withdrawing the licenses or authorisations of firms and individuals. It can also restrict firms and individuals from being involved in the provision of financial services in or from the DIFC. Examples of these actions, including those that were arrived at by way of settlement, can be found by going to the Regulatory Actions page on our website:
The DFSA will also generally issue a Media Release about any action that it has taken:
AMEinfo: What laws protect investors from financial companies' mismanagement practices, or rogue intent?
DFSA: One of the objectives of the DFSA set out in law (and reproduced in the MR) is to protect users and prospective users of the financial services industry in the DIFC, which includes investors. The DFSA administers laws and Rules which are designed to achieve this including but not limited to ensuring that communications/disclosures to investors are clear, fair and not misleading and also ensuring that products recommended to investors are suitable for them.
The DFSA, however, does not have criminal jurisdiction. Criminal conduct is referred to the appropriate authorities in the UAE.
Bryan Stirewalt, Chief Executive of the DFSA, commented on Feb 4: “The DFSA will take immediate action to ensure the interests of its clients and the DIFC are protected. We will not hesitate to suspend a firm that repeatedly fails to comply with our regulatory requirements and also fails to deal with us in an open and cooperative manner. The DFSA is committed to protecting the investors’ interests as well as the reputation and integrity of the DIFC’s financial services.”
The DFSA formally brought these concerns to MGL’s attention in April 2018, and MGL failed to address the concerns to the DFSA’s satisfaction, DFSA said.
Who is MGL?
Morgan Gatsby is a diversified financial services group based in Dubai. It mentions capabilities covering Investment Banking, Wealth Management and Corporate Advisory, and serving a wide range of clients, including high net worth individuals, family offices and small to medium-sized regional businesses.
“We are renowned for building long-standing and successful relationships with our clients and for delivering services that are tailored to their individual needs and requirements,” it said on its website.
“We understand the importance of integrity in promoting and building sustainable business and personal relationships with all stakeholders, and are committed to generating value for our clients.”