Kuwait Capital Markets Authority imposes financial penalties including KD 10,000 on Sharq Investment Company for conflicts of interest and record-keeping breaches

The Kuwait Capital Markets Authority issued a Disciplinary Board decision imposing financial penalties on Sharq Investment Company for breaches of the Executive Bylaws to Law No. 7 of 2010 covering business ethics and the handling of clients’ funds and assets. The findings centre on failures to manage conflicts of interest and employee trading risks, alongside weaknesses in capturing, evidencing and retaining client orders. The Authority found the firm had not taken appropriate measures to reduce conflicts of interest between customers and employees’ transactions, including employee dealing in shares associated with client portfolios and insufficient maintenance of a restricted securities list. It also identified trading in a managed client portfolio involving excessive buying and selling at similar prices, including instances where the selling price was below the purchase price, during 1 October 2024 to 17 February 2025. Additional breaches related to not recording telephone conversations used to execute clients’ buy and sell orders for listed shares during 1 October 2024 to 23 February 2025, failure to provide compliant copies of written client orders, and deficiencies in the firm’s document retention policy for client orders. Penalties were set at KD 10,000 for the first and second violations, KD 5,000 for the third violation, and KD 3,000 for the fourth to sixth violations.