Greg Kilminster
Head of Product - Content
DFSA fines former banker for misleading conduct
The Dubai Financial Services Authority (DFSA) has imposed a fine of USD 980,020 (AED 3.6 million) on former private banker Peter Georgiou for engaging in misleading and deceptive conduct during his tenure at Mirabaud (Middle East) Limited (MMEL). This penalty follows the regulator's determination that Georgiou not only violated DFSA rules but also played a role in his former employer’s breaches of anti-money laundering (AML) regulations.
Serious misconduct
In addition to the financial penalty, Georgiou has been barred from holding any position or employment at a DFSA-authorised firm. He is also prohibited from performing any function related to financial services within the Dubai International Financial Centre (DIFC).
The DFSA’s investigation revealed significant lapses in Georgiou’s professional conduct. Among the most egregious were his deliberate attempts to mislead MMEL’s compliance team by withholding crucial information, thereby undermining the firm’s AML systems. Additionally, Georgiou was found to have sent a forged email to a client, further compounding his deceptive actions.
The regulator also noted that Georgiou provided false information during an interview with the DFSA, an act that seriously compromised the integrity of the regulatory process. This fine against Georgiou follows a US$3,000,000 penalty levied against MMEL in July 2023 for its inadequate AML systems and controls.
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CFTC fines firm and manager for fraud
The Commodity Futures Trading Commission (CFTC) has ordered Get Money Tradez LLC (GMT) and its managing member, Jeffrey Carmon, Jr, to pay more than $520,000 for fraudulent conduct involving foreign exchange (forex) trading pools. The CFTC found that the unregistered firm and its manager violated several provisions of the Commodity Exchange Act (CEA) by defrauding 19 investors and misappropriating funds.
Fraudulent scheme and misappropriation
Between July 2021 and the present, GMT and Carmon solicited nearly $950,000 from 19 participants to invest in two forex trading pools they controlled. The CFTC determined that the respondents engaged in deceptive practices by making material misrepresentations about Carmon’s trading success. Contrary to his claims of being a highly successful trader, Carmon experienced net losses in 17 out of 19 months between January 2020 and July 2021 while trading forex and commodity contracts for difference.
Instead of using the investors' funds as promised, Carmon misappropriated at least $113,000 for personal expenses. These included payments to the IRS, and purchases at restaurants and retail stores. The order also noted that the respondents commingled the pool funds, further violating regulatory requirements.
Regulatory failures and penalties
In addition to the fraudulent activities, GMT operated as a commodity pool operator (CPO) without registering with the CFTC, and Carmon failed to register as an associated person of a CPO. These registration failures compounded the severity of the respondents' actions.
The CFTC's order requires GMT and Carmon to pay $262,000 in restitution to the defrauded pool participants and an additional $262,000 as a civil monetary penalty. The respondents are also permanently banned from trading in any markets regulated by the CFTC and from registering with the agency.
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Abu Dhabi Global Market consults on new rules for stablecoins
The Financial Services Regulatory Authority (FSRA) of the ADGM has issued a consultation paper proposing a new regulatory framework for the issuance of fiat-referenced tokens (FRTs). These are a type of stablecoin that is pegged to a specific fiat currency and which is backed by high-quality, liquid assets denominated in the same currency.
The FSRA believes a tailored regulatory framework is necessary to ensure that FRTs are issued and redeemed safely. While all stablecoins are pegged to a fiat currency, FRTs differ from other types of stablecoins, such as asset-referenced or commodity-backed tokens, due to the stability of their underlying assets.
The proposed framework aims to balance the need to support innovation in the financial services industry with the importance of protecting consumers and maintaining market integrity. It will include requirements related to the issuance, redemption, and custody of FRTs, as well as measures to prevent money laundering and terrorist financing.
The FSRA is also conducting a review of its existing suite of Regulated Activities to consider any necessary amendments in light of the introduction of FRTs. This includes assessing how FRTs might be used as a means of payment or as a consideration for services or investments.
The consultation paper is open for public comment until 3 October 2024.
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