DFSA imposes $1.5m in fines on two companies and two people for unauthorised activities

The companies, belonging to Adenium Group, have been penalised for ‘illegally marketed unregulated collective investment funds’ and breaching other regulations

Aecal’s DIFC licence was previously suspended by the DFSA in February 2020 for 12 months. Antonie Robertson/The National

Dubai Financial Services Authority has imposed fines collectively worth $1.55 million on two companies and two people belonging to the Adenium Group, a solar energy projects operator, for breaches including unauthorised financial services activities.

Both the firms, Adenium Energy Capital (Adenium Cayman), a Cayman Islands-registered company, and Adenium Energy Capital Advisors (Aecal), a DFSA-authorised firm, are in liquidation, the regulator of the emirate’s financial services free zone said on Tuesday.

The two people facing the penalties are Wassef El Sawaf, the former chief executive of Adenium Cayman and former senior executive officer of Aecal, and Youssef Chaker, the former chief legal officer of Adenium Cayman and a former licensed director of Aecal.

The DFSA said Adenium Cayman had engaged in “unauthorised financial services activities, including illegally marketing unregulated collective investment funds”, and that Aecal was “knowingly involved in Adenium Cayman’s breaches and itself breached a number of DFSA rules relating to customer on-boarding, client classification, capital requirements and systems and controls”.

Mr El Sawaf and Mr Chaker were “knowingly involved in Adenium Cayman’s and Aecal’s breaches and breached a number of the DFSA’s principles for authorised individuals”, the authority said.

Financial penalties included Dh4.6m ($1.2m) imposed on Adenium Cayman and Dh354,337 on Aecal, reduced because of a settlement from Dh506,199.

Mr El Sawaf was penalised Dh483,301, cut by 20 per cent due to his “co-operation with the DFSA” and then by a further 30 per cent because he agreed to settle the matter; while Mr Chaker was fined Dh271,471, which was also reduced by 50 per cent.

Aecal’s DIFC licence was suspended by the DFSA in February 2020 for 12 months due to concerns over its failure to classify and on-board investors in the projects; comply with applicable anti-money laundering legislation; conduct appropriate client suitability assessments; deal with the DFSA in an open and co-operative manner; ensure that it has an appropriate corporate governance framework; and communicate with its clients in a clear, fair and non-misleading way.

In March 2021, Aecal was placed into voluntary liquidation. Adenium Cayman was also placed in liquidation in the Cayman Islands in July 2020.

“The DFSA will not tolerate DIFC [Dubai International Financial Centre] based corporate groups that have only one entity regulated by the DFSA, but create the impression that all of the group’s financial services are regulated by the DFSA and onboard clients with another group entity that is not subject to DFSA regulation,” said DFSA chief executive Christopher Calabia.

Updated: March 22, 2022, 1:23 PM