DUBAI: A Dubai court will start on Tuesday the trial of six investors and brokers charged with conducting bogus trades on the shares of Dubai Islamic Bank in August, the state news agency WAM reported. The case, which led to the cancellation of trades worth $2.6 billion in the stock on the Dubai bourse, had shaken the U.A.E.'s financial community and renewed calls for enforcing even tougher regulations to stamp out market abuses. Share prices in the U.A.E. often fluctuate before key announcements from companies.
Brokers said the trial was the first of its kind in the U.A.E., which is tightening its monitoring of its bullish stock markets.
WAM quoted Dubai's prosecutor, Assem Issa al-Hamdan, as saying the defendants were two Emirati nationals and four Arabs.
He did not identify them but the U.A.E.'s financial watchdog last month suspended U.A.E. nationals Zayed bin Owaidah al-Qubaisi and Khaled Ahmad Mugrin al-Kindi, as well as a Palestinian financial adviser and Al-Sharhan Brokerage for involvement in the scandal.
"The fact that issues such as this one are finally being addressed is a positive sign," said Walid Shihabi, researcher at Shuaa Capital.
"I think if, in fact, there was a material breach of the regulations for personal gain it will be very useful that people realize there is implementation of the rules in place."
A probe by the Securities and Commodities Authority (SCA) showed the investors had manipulated the market by trading large quantities of DIB shares on the Dubai bourse to rapidly increase and decrease the price to make a profit.
Market manipulation is an offense according to the SCA's rules and regulations.
Enforcement of trading regulations has been spotty in the past, although the SCA won praise from investors for acting quickly in the Dubai Islamic Bank case. Insider trading on the Dubai bourse, however, remains widespread according to traders. SCA's powers are still limited and the watchdog does not function independently of the and Planning Economy Ministry.
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