Dubai's DFSA fines brokerage $1.37m for failing to comply with regulatory requirements

Penalty was halved from the original amount due to firm's efforts to remediate the issue

The DFSA has been cracking down on regulatory non-compliance among firms in the DIFC. Photo: DIFC
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The Dubai Financial Services Authority has imposed a fine of more than Dh5 million ($1.37 million) on brokerage RJ O’Brien Mena Capital for failing to comply with regulatory requirements.

The fine was reduced from the original Dh10.25 million since the firm offered the authority an enforceable undertaking to remediate the failings and agreed to settle the matter, the regulator of the Dubai International Financial Centre said in a statement on Friday.

The firm also engaged an external compliance expert to assist and to verify that the necessary remediation has been completed.

“Authorised firms must ensure that they have adequate compliance and other resources to be able to comply with their legal and regulatory obligations," said Patrick Meaney, head of enforcement at the authority.

"Compliance is not an incidental cost of doing business, it is a critical function that must be adequately resourced in terms of both number and quality of staff.”

RJO Mena is a fully owned subsidiary of JVMC Holding, a group holding company that operates in the US, UK, EU, Middle East and Asia.

The group has a futures brokerage and clearing firm, including a full clearing member of the Chicago Mercantile Exchange and all its markets, as well as the markets operated by the Intercontinental Exchange Group in the EU and the US.

The matter refers to RJO Mena's acquisition of LFS, another DFSA authorised firm, which was initiated in 2020.

The authority said it found the firm "did not undertake sufficient planning and analysis to ensure it could comply with its ongoing regulatory obligations after acquiring an additional brokerage".

"The firm’s senior management were aware of the lack of compliance resources and failed to adequately address it to ensure that the compliance function was able to fulfil its regulatory obligations," it said.

But the authority said it "did not find any evidence that the firm acted deliberately to contravene DFSA administered laws and rules".

It also said the contraventions occurred during the Covid-19 pandemic, which made planning and oversight of the LFS integration "more challenging due to travel restrictions preventing travel by group employees to Dubai".

The authority has been cracking down on regulatory non-compliance as part of efforts to maintain confidence and stability in the financial services industry in the DIFC. The regulator aims to reduce systemic risk in the sector and prevent, detect and restrain conduct that causes or may cause damage to the reputation of the financial hub.

Updated: December 29, 2023, 11:07 AM