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09 Mar 2022, 10:36 am

DFSA decisions to penalise Dalma Capital Management Limited and Zachary Cefaratti referred to Financial Markets Tribunal

The Dubai Financial Services Authority (DFSA) has today published two Decision Notices concerning action the DFSA has decided to take against Dalma Capital Management Limited (Dalma), a DFSA Authorised Firm, and Mr Zachary Cefaratti, the Senior Executive Officer and a Licensed Director of Dalma.

Both Dalma and Mr Cefaratti dispute the DFSA’s findings and have referred the Decision Notices to the Financial Markets Tribunal (FMT) where the parties will present their respective cases.  The DFSA’s decisions are therefore provisional and reflect how the DFSA views Dalma’s and Mr Cefaratti’s conduct.  

The DFSA imposed a fine of USD 170,000 on Dalma and a fine of USD 300,000 on Mr Cefaratti.  Further, the DFSA prohibited Mr Cefaratti from holding office in or being an employee of a regulated DIFC entity, and restricted him from performing any functions in connection with the provision of Financial Services in or from the Dubai International Financial Centre (DIFC).  The DFSA also required Mr Cefaratti to dispose of his holdings in Dalma within a specified time period. 

The DFSA stayed enforcement of the penalties on Dalma and Mr Cefaratti until the completion of FMT’s review because Mr Cefaratti provided an Enforceable Undertaking to the DFSA that he will take a leave of absence from his Dalma Authorised Individual Functions.  He has also voluntarily resigned from DIFC domiciled funds.  Mr Cefaratti’s EU does not prevent him from providing support to Dalma to ensure continuity of business.

The FMT will determine what, if any, is the appropriate action for the DFSA to take in respect of Dalma and Mr Cefaratti and will remit the matter to the DFSA with such directions as the FMT considers appropriate to give effect to its determination.  The DFSA’s decisions may be confirmed, varied or overturned as a result of the FMT’s review.

The DFSA decided to take action against Dalma for, in the DFSA’s view, failing to conduct its business activities with due skill, care and diligence.  Between 5 April 2016 and 6 June 2016, Dalma arranged for and permitted trades to be placed on behalf of one of its funds (the Dalma Fund) by an individual who was not suitably qualified and experienced to place the trades, and who was not employed by, or otherwise contractually obligated to, Dalma.  Further, in the DFSA’s view, Dalma provided false, misleading and deceptive information to the DFSA, and concealed information such as to mislead or deceive the DFSA, concerning the trading carried out by the individual described above.

The DFSA decided to take action against Mr Cefaratti for breaches of DFSA legislation arising from his knowing involvement in Dalma’s unlawful conduct.  The DFSA found Mr Cefaratti to be knowingly involved in Dalma’s failure to conduct its business activities with due skill, care and diligence.  As Dalma’s Chief Operating Officer at the relevant time, he was responsible for the operations of Dalma, including the way in which the Dalma Fund was managed.  He also provided access to the trader to the Dalma Fund's trading platform and facilitated the trading by the trader.

Further, the DFSA found Mr Cefaratti to be knowingly involved in Dalma’s misleading and deceptive conduct and, as the SEO at the relevant time, he was ultimately responsible for the information provided to the DFSA.

The DFSA also decided to take action against Mr Cefaratti because, in the DFSA’s view, Mr Cefaratti provided false, misleading and deceptive information to the DFSA during three separate interviews with the DFSA under oath between 18 April 2019 and 31 July 2019.

In the DFSA’s view, as an Authorised Individual, Mr Cefaratti failed to observe high standards of integrity and fair dealing, and to deal with the DFSA in an open and cooperative manner.

Both Dalma and Mr Cefaratti deny all of the DFSA’s allegations.

The detailed reasons for the DFSA’s action against Dalma and Mr Cefaratti are set out in the respective DFSA’s Decision Notices dated 19 October 2021 which can be found in the Enforcement Decision Notices section of the DFSA website.

The DFSA does not intend to make any further public comment until the FMT’s review is complete, except as necessary to correct any inaccuracies.  Information about pending FMT matters, including details of any public hearings, can be found on the FMT section of the DFSA website:

https://www.dfsa.ae/about-dfsa/our-structure/financial-markets-tribunal

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