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The Capital Markets Authority Warns Against the Expansion of Financial Fraud Practices

 Published on: 16-Nov-2018

The CMA draws the attention of the public including the investors, the dealers of securities activities, and those interested in entering the world of investment in its various forms and fields to be very cautious and prudent concerning the fake or unknown companies and persons, and unlicensed entities’ use of the available means of communication such as websites, social media, phone calls, SMS and so on to promote advisory services and advertise suspicious and high risk investment and financial products without obtaining the necessary licenses or being subject to official regulators, and publish fake advertisements and misleading invitations to invest in metals, products, or oil, or trade in the local exchange or foreign exchanges, or the digital currencies which was previously cautioned by the CMA due to not being subject to any regulatory or supervisory authority that protects those whom are dealing in them.
The CMA also emphasizes to the public that the invitations of the safe and guaranteed investments issued by those entities, and the additional income, incredible returns, and quick profits that they promise to gain in record time do not comply at any case with the correct investment rules and tools, and do not fall outside the scope of “Financial Fraud” practices that aim at robbing the money of other people alike and depleting their savings illegally, especially that some of those entities include in their invitations attractive phrases under CMA’s name or logo in unlawful way to delude the audience of having the necessary license, and represent an additional incentive for them to respond to those invitation, and fall victim to financial fraud that are expanded electronically at the present time.
Based on the above, the CMA urges all of those interested in entering the world of investment, regardless of their field, not to follow the previously mentioned misleading invitations, and to take due diligence before taking their investment decision. It also draws their attention to comply with the following:
• Communicate with the Capital Markets Authority and the other local regulatory entities (Ministry of Commerce and Industry, and the Central Bank of Kuwait) before entering any investment or financial transactions to verify the promoters' acquisition of the necessary licenses, the reliability of those entities, the legality of dealing with them, and their compliance with the applied laws.
• Beware of all suspicious advertisements and investment invitations, especially those promising to maximize the firm profits, increase the incomes, and join the wealthy elite.
• Inadequacy of the claim of some of the entities that promote investment and provide services that they obtained licenses to mislead the audience and market its unlicensed products and activities by communicating with the CMA or reviewing the list of licensed companies on its website to ensure the validity of those licenses, or referring to the other regulatory entities to ensure the soundness of the condition of the marketing entities and the legality of dealing with them.
• Not interacting with the calls and ignoring the advertisements, SMS, and emails of anonymous sender, or those whose promoter refuses to present the required documents especially the license details, or when they’re not found among the lists of licensed entities and activities on the CMA website, or if they were not subject to the control of any of the other regulatory entities.
• Heading to the regulatory entities established outside the State of Kuwait to which the promoting company is affiliated to ensure obtaining the required license, and ensure the compliance of its regulating legislations with the executed Kuwaiti laws and legislations.
• Verify the truth of the legal entity of the promoter of investment including its memorandum, license, commercial register, and articles of association, and its inclusion of the necessary information to take the investment decision.
• Viewing the historical performance of the promoter, and the presented investment or subscription prospectus, especially the investment assets and its channels, financial reports, investment tools and the nature of the risks associated with it, their acceptability, and the expected returns.
• Hiring experienced professionals in the legal and investment fields before investing in case of lacking the required experience and knowledge.
• Requesting a copy of the contract that will be signed with the promoter to be aware of its terms and conditions, and rights and duties in advance before the signature. It is necessary to avoid revealing personal and banking information prior to that, or signing any document including unclear data or incomplete forms, in addition to ensuring obtaining a copy of the contract after being signed, and all the necessary documents.
• Continuous communication with the contracted companies, following-up their conditions and financial statements, and the condition of the agreed investment and its developments, and get its balance sheet periodically and continuously.


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