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Abu Dhabi Global Market Regulator Slaps Sarwa Investment Platform with $122,500 Fine

Penalty issued after Sarwa was found to have offered securities in ADGM without an approved prospectus

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Staff Writer, TLR

Published on May 22, 2024, 12:07:41

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abu dhabi global market, investment, sarwa, digital wealth

Abu Dhabi Global Market’s financial regulator has imposed a $122,500 fine on the investment platform Sarwa Digital Wealth (Capital) for violating rules related to offering securities.

The penalty was issued after Sarwa was found to have offered securities in ADGM without an approved prospectus during April and May of the previous year, breaching Financial Services Regulatory Authority (FSRA) regulations, the financial centre announced.

A prospectus must be approved by the FSRA and should contain all necessary information for an investor to make an informed decision regarding the investment, according to ADGM. Without this prospectus, potential investors did not receive sufficient information to make an informed decision, it stated.

In total, 144 investors subscribed to the offer, committing approximately $2.1 million, ADGM data revealed.

However, Sarwa promptly reversed all committed subscriptions after being notified by the FSRA about the concerns, ADGM noted.
Sarwa also qualified for a fine reduction by agreeing to settle early, with an additional reduction for recognizing the regulatory action taken by the DFSA.

Since its opening in 2015, ADGM has been home to international banks, insurance companies, global asset managers, as well as financial technology and cryptocurrency exchanges, maintaining strict oversight of companies operating within its jurisdiction.

In February, ADGM fined Baker Tilly and its audit principal $62,500 for auditing failures and six financial institutions over $46,000 for reporting violations.

In October of the previous year, it also levied a $486,000 penalty on FinTech company Pyppl for breaking anti-money laundering regulations. In August, it fined KPMG Lower Gulf $30,000 for breaches of audit rules.

The FSRA’s investigation was coordinated with the Dubai International Financial Centre, whose Dubai Financial Services Authority conducted a parallel investigation into a company linked to Sarwa within its jurisdiction.

Sarwa, which has over 150,000 registered users, utilises artificial intelligence to assess an investor’s risk tolerance and assigns them a portfolio of exchange-traded funds, charging lower advisory fees than traditional financial advisers and wealth managers.

In August 2021, Sarwa raised $15 million in a funding round led by Abu Dhabi's Mubadala Investment Company. This Series B round brought the trading platform’s total funding from regional and international investors to about $25 million since its inception, the company reported at the time.

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