The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has fined Elia Investments Limited (Elia) and its sole shareholder and former director Babar Abbas a combined total of over $4.7m (£4.1m, €4.7m).
This follows an FSRA investigation which found that Elia had:
- Over the period from around July 2019 to around June 2021, carried on, and purported to carry on, the regulated financial services activity of providing credit in ADGM on an unauthorised basis;
- Published false statements concerning its activities; and
- Made false claims to be authorised to undertake financial services.
Elia was never licensed or authorised by the FSRA to carry out any form of regulated activity in ADGM.
The investigation found that Elia had conducted unauthorised regulated activities by entering into credit agreements with at least four victims.
Elia did not provide the credit it purported to offer under each agreement and, in fact, did not have the capacity to provide the credit it purported to offer. Instead, Elia “solicited and obtained upfront payments from its victims under these arrangements, and then failed to return the majority of the money, causing financial harm to its victims”, the FSRA said.
The FSRA handed Elia a financial penalty of $2,381,798, which includes a disgorgement amount of $1,881,798 and a fine of $500,000.
The FSRA’s investigation also found that Abbas directed Elia’s conduct and used the money Elia had obtained, and not returned, for his own personal benefit.
Further, Abbas was found to have provided false and misleading information to the FSRA during its investigation.
The regulator also handed Abbas a financial penalty of $2,381,798, which includes a disgorgement amount of $1,881,798 and a fine of $500,000.
In addition, the FSRA has concluded that Abbas is not a fit and proper person to be involved in the industry and prohibited him indefinitely from performing functions in the ADGM.
Emmanuel Givanakis, chief executive of the FSRA, said: “The FSRA will take the necessary and appropriate action against entities and individuals that are in breach of our regulations and rules, including those that engage in unlicensed activities in ADGM or who falsely purport to be licensed, and seek to mislead the public in this way.
“The conduct in this matter was particularly serious, in that the entity and individual engaged in unauthorised activities to obtain upfront payments of money from their victims, the majority of which they then failed to return.
“In addition, Mr Abbas was found to have provided false information to the FSRA when being interviewed during the course of the investigation. These are serious acts of misconduct and warrant the severe penalties imposed in this matter, as well as the prohibition imposed on Mr Abbas to perform functions in ADGM.”