Arabtec chief banned from share trading for six months

The chief executive of Arabtec Holding says he does not fully understand the market regulator's allegations against him.

Riad Kamal, the chief executive of Arabtec Holding.

The stock market regulator yesterday banned the head of the country's biggest builder from trading shares for six months.

The chief executive of Arabtec Holding yesterday expressed surprise at the unusual move and said he did not fully understand the allegations against him.

Riad Kamal confirmed that the UAE's Securities and Commodities Authority (SCA) had sent him questions about personal transactions in 2009 but that he had not traded shares since then.

"I'm talking about minor trades in shares, and nothing of substance," he said.

A circular distributed by the Abu Dhabi Securities Exchange (ADX) yesterday said it was "suspending trader Mr Riad Borhan Taher Kamal from trading either in person or in any other capacity in licenced stock markets in the UAE for a period of six months effective as of Wednesday."

The circular, signed by Ghannam Bati al Mazroui, the chief of operations and control department at the exchange, added that the suspension "shall cover only buying transaction of securities listed in licenced stock markets in the UAE. The decision also states that no third party can trade on Mr Kamal's behalf".

An SCA official confirmed that the circular sent out to brokerages, and seen by The National, was authentic.

Arabtec, a builder based in Dubai with a market capitalisation of Dh2.4 billion (US$653 million) expanded rapidly during the UAE's property boom years, notching up high-profile contract awards such as the Burj Khalifa. But the rapid decline in the construction sector has hit the company's earnings and its stock, which has lost about a quarter of its value in the past 12 months.

Last January, the company announced it would be acquired by the Abu Dhabi industrial conglomerate Aabar Investments. But the deal did not to materialise.

The regulator said at the time that it had launched a review of trading activity about the time the deal was announced. It is not clear whether yesterday's action is related to that review.

Mr Kamal, who received a copy of the memo from a brokerage house, said the ruling was "wrong" and that he had "no idea" about it. He said that the SCA had not been in touch with him and that he would contact the ADX this morning for clarification.

"I did get a copy of this but not directly. I have no idea [what it is about] and I'd like to know what is it," he said. Mr Kamal said the SCA had contacted him in 2009 regarding his personal trades, but he did not say why, or what his response to the queries was.

The ADX was not reachable for comment and a spokesman for the Dubai Financial Market said he was not aware of the circular being sent.

Ameed Kanaan, the general manager of Al Jazeera Financial Services, said there could be an impact on the Arabtec stock if "the market perceives there is a problem".

The SCA rarely discloses its enforcement actions.

Stock market regulators across the Gulf have stepped up enforcement against "cases with major discrepancies" in the markets, said Nick Nadal, a director at Hawkamah Institute for Corporate Governance.

"They are flexing their muscles," he said. "The regulators are taking on the role they should be playing as far as looking at fining individuals, companies and even boards … This is important to build credibility in the market and send serious signals."

Shares in the Arabtec closed 0.49 per cent lower at to Dh2.03.

With additional reporting by Gregor Stuart Hunter