Sarwa Digital Wealth, an online investment and trading platform, has been fined Dh449,881 by the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) for offering securities without the necessary regulatory approvals. This penalty underscores the strict regulatory environment in the UAE and the FSRA’s commitment to upholding the laws that govern financial activities.
The FSRA’s investigation revealed that Sarwa had made offers to invest in securities related to shares of its parent entity to its network of clients and application users around April and May 2023. This was conducted without having an FSRA-approved prospectus, a critical document that provides potential investors with essential information to make informed investment decisions.
Violations noted by the FSRA included Sarwa distributing communications to a substantial number of potential investors with details on the terms of the offer and the securities involved. The company also maintained a website with further information about the offer and engaged directly with potential investors to provide additional information and facilitate their subscriptions.
As a result of not having an approved prospectus, Sarwa failed to provide 144 investors, who committed approximately $2.1 million, with sufficient details about the investments. Upon recognizing the issue highlighted by the FSRA, Sarwa took immediate action by reversing all committed subscriptions to mitigate the situation.
In addition to the financial penalty, the FSRA has mandated Sarwa to overhaul its governance arrangements to prevent future violations. The fine includes a reduction as Sarwa agreed to settle promptly, taking advantage of a discount provision. An additional discount was granted due to related regulatory actions taken by the Dubai Financial Services Authority (DFSA), which was investigating a related firm licensed in the Dubai International Financial Centre.
Emmanuel Givanakis, CEO of the FSRA, stated, “This enforcement action demonstrates the FSRA’s robust regulatory approach to its framework, ensuring investor protection is paramount and maintaining high standards of conduct among regulated entities.” This case serves as a reminder of the rigorous compliance and regulatory requirements in the UAE’s financial markets and the importance of adhering to them.
