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KUWAIT:
Shariah compliant investment bank Gulf Finance House (GFH) has filed an
appeal against a decision by the Capital Markets Authority (CMA) of
Kuwait to monitor its Kuwait-listed shares for six months. The decision
was made following an investigation into the company’s unusual trading
activity on its shares last year ahead of a regulatory disclosure.
GFH’s trading volumes peaked to record highs in May 2013 prior to the
signing of an MoU between Bahrain-based Khaleeji Commercial Bank (an
associate of GFH) and Bank Alkhair, to study the feasibility of a
possible merger. This resulted in an inquiry by the CMA for a
justification to the high trading volume, GFH later issued a notification
to the markets stating that ‘no recent or major development’ took place which
may have caused the extraordinary trading of the company’s shares.
Subsequently, when the MoU was announced in June, speculations arose as
to the unusual trading activity. In September 2013, CMA notified GFH
about the probe being conducted on the events and summoned a
representative from GFH to submit justifications on the questions raised.
The CMA’s decision was later issued on the 17th of April 2014,
putting GFH under monitoring for a period of six months without the
imposition of any financial penalty.
According to a filing on the Bahrain Bourse yesterday, GFH’s petition
against the decision of the CMA was on the grounds that: “GFH considers
the high trading observed on the 19th-21st May 2013
was not due to the MoU signed on the 30th May 2013 and
subsequently announced on the 3rd June 2013, post regulatory
approvals.”
Industry observers have pointed out that these series of events would
negatively affect the stock markets as well as the confidence of relevant
stakeholders. The investigation is said to be indicative of weak
corporate governance, internal controls, shareholder responsibility and
that it will have a medium to long-term effect on the industry.
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