x Abu Dhabi, UAEWednesday 24 January 2018

Bank pair fined $11,978 over failure to disclose

The DIFC's regulator has fined two former company directors for failing to disclose that they were under investigation in India.

Two executives sanctioned in a stock-trading scandal in India have been fined Dh44,000 (US$11,978) each by the Dubai Financial Services Authority (DFSA) for failing to disclose the matter to regulators.

The DFSA, which oversees activity in the Dubai International Financial Centre (DIFC), announced the fines against Arun Panchariya and his brother Satish yesterday after finding they failed to disclose "material information" about companies with which they were involved.

It also found they did not properly notify the regulator about "investigations and regulatory actions" in India.

"The DFSA relies on firms and individuals to disclose appropriately any mandatory information and any other information of which the DFSA would reasonably be expected to be notified," said Paul Koster, the DFSA chief executive.

"Accordingly, the DFSA will take action where firms and individuals have breached these requirements," Mr Koster said.

Both Panchariya brothers gave up licences to be directors at companies incorporated in the DIFC this year, DFSA records show. Satish ceased to be licensed on May 15, and Arun's licence was withdrawn last month after he resigned as the president and a director of Euram Bank Asia, based in the DIFC.

Neither brother immediately informed the DFSA he was under investigation by the Securities and Exchange Board of India (Sebi) for allegedly attempting to pump up shares of an Indian company called Alka, the Dubai regulator said.

Arun Panchariya did not tell the DFSA of the case until a final appeal was rejected by the Supreme Court of India last year and he paid a 400,000 rupee (Dh29,935) penalty. His brother Satish paid a 800,000 rupee penalty, DFSA documents reveal.

Registration "requires disclosure where an individual has been concerned with the management of a body corporate which has been or is the subject of an investigation into an allegation of misconduct or malpractice", according to DFSA rules.

The brothers also failed to inform the DFSA of numerous board of directors positions they held, the regulator said.

As for the DFSA fine, Arun Panchariya said: "It's already paid."

The DFSA sanction comes as he faces a fresh investigation in India over allegations that he was involved in a complicated investment scheme that flooded Indian stock markets with company shares originally issued overseas. Last month Sebi issued a directive barring Arun Panchariya and Pan Asia Advisors, a company he is linked to, from trading shares. It also issued a 44-page report detailing the allegations.

But Mr Panchariya has proclaimed his innocence, saying the report "provides no facts or basis, but instead suppositions, opinions and implications".

The brothers had both previously been directors of Dubai's Euram Bank Asia, a joint venture between Pan Asia Advisors and Euram Bank of Austria.

Euram Bank of Austria was named last month in Sebi's directive and was barred from trading in securities - a ruling it is appealing against, claiming it had no involvement. The venture, based in Dubai, is not under investigation by the DFSA and does not expect fines or any other disciplinary action, according to an executive.

The DFSA action "relates to a separate matter to the Sebi notice and is limited to the two individuals named", said Viktor Popovic, the chairman of Euram Bank Asia and the chief executive of Euram Bank in Vienna. "[The] DFSA did not initiate any enforcement proceedings against the firm in connection with this matter and therefore there is no expectation of a fine or other disciplinary action against the firm."

In issuing its fines, the DFSA found the two Panchariya brothers violated regulations stating people cannot "provide information which is false, misleading or deceptive to the DFSA" and rules stating people "must deal with the DFSA in an open and co-operative manner".