The regulator of Dubai financial free zone has ordered investment banking advisory firm Mas Clearsight to pay a total of Dh12 million in compensation to 20 investors for breaching the authority’s rules, it said.
It followed an investigation into an unusual investment scheme that was intended to fund the publication of a group of limited-edition books.
The Dubai Financial Services Authority (DFSA) said it chose to censure the company and direct it to pay the compensation instead of fining it because of MAS’s financial position. The advisory company is currently being liquidated.
MAS Clearsight had marketed an investment in limited-edition publications during 2010 to 2011 but failed to produce all of the publications and didn’t pay the investors, who were promised 100 per cent repayment of initial stakes and a 50 per cent minimum return on investment, the DFSA said.
The regulator launched an investigation into MAS after some investors complained about their investments.
“The DFSA investigated the matter and found that MAS had promoted a collective investment fund in a manner that did not comply with the applicable laws and rules,” the DFSA said in a statement. “In addition, the investors were not properly treated as clients by MAS and were thereby excluded from receiving the other protections they were entitled to under the DFSA’s regulatory regime.”
The DFSA had suspended the firm’s licence in June this year to halt its financial services operations in the DIFC.
In 2009, MAS was granted a licence to operate in DIFC offering services that included advising on financial products or credit, and arranging credit or deals in investments.
“MAS initially challenged the DFSA’s Decision Notice and referred the decision to the Financial Markets Tribunal (FMT), which is empowered to review decisions made by the DFSA,” said the regulator. “However, on 19 November 2015 the DIFC Courts ordered a liquidator to be appointed to MAS. The liquidator decided not to proceed with the challenge against the DFSA’s decision. Accordingly, the tribunal dismissed the appeal, thereby confirming that the DFSA’s Decision Notice remains in effect.”
According to DFSA’s decision notice, MAS had raised US$4.8 million from 25 investors for the investment in three large-format books. Twenty-one of those investors were individuals and four were companies. Two of the three books remain unpublished.
MAS was supposed to earn a fee based on the percentage of revenue generated from sales of the books.
MAS Clearsight was set up in 2009 by Mubashir Sheikh, who had worked for Citibank, Merrill Lynch and Fortis Bank, according to the company’s website.
He formed MAS Clearsight from the acquisition of Fortis Private Banking & Trust in Dubai in 2006, which he had launched and managed, it says.
The company said on its website it had closed transactions worth $28 billion, without giving a time frame. It has advised a number of high-profile companies and organisations, such as the World Bank, Etisalat, Dubai-based private equity firm Abraaj Group and utilities firm Saudi Electricity Company on transactions ranging from a couple of millions dollars to billions, according to the website.
The company’s website claims involvement in a number of high-profile deals involving major regional companies.
It lists offices in London, Geneva and Islamabad in addition to Dubai. Calls to its overseas offices were not answered.
dalsaadi@thenational.ae
