A US judge has ordered relatives of Hazem al Braikan and two Kuwaiti companies to pay about US$6.4 million (Dh23.5m) in restitution and fines to settle a stock market manipulation case that took a morbid turn after al Braikan died in an apparent suicide last year.
The settlement of the charges against al Braikan and the other Kuwaiti companies, which have said they merely acted at Mr al Braikan's behest, brings to a close a sad chapter in the frenetic financial history of the Gulf, where many markets are loosely regulated and talk of insider trading and rumour-mongering is rampant.
Judge Naomi Buchwald approved a settlement reached in August between the US Securities and Exchange Commission (SEC) and al Braikan's estate, Al Raya Investment Company and Kipco Asset Management Company (KAMCO). This month the judge cancelled a freeze placed on KAMCO's assets after it paid its share of the judgment, about $2.4m. Al Raya has paid $1.5m, but al Braikan's estate sought and received in August a two-month extension on payment of the $2.5m that was owed.
"Al Braikan was sued by the SEC in July last year for engaging in an illicit scheme to profit by issuing hoax takeover announcements for Harman International Industriesand another company," the SEC said in a statement in August. "The SEC's emergency action, filed three days after the trading in Harman occurred, froze millions of dollars in profits before they could be sent overseas."
The SEC had alleged that al Braikan made millions of dollars by planting false rumours about acquisitions of Harman, an audio equipment company, and Textron, an aviation company based in the US state of Rhode Island. He allegedly used his own accounts to make the trades, along with those over which he had control at Al Raya, the company where he was chief executive, and at KAMCO, his former employer.
Al Braikan allegedly concocted a press release in July last year about a bid by a Saudi Arabian firm called Arabian Peninsula Group to take over Harman for $49.50 a share, almost double the stock's value at the time, according to the SEC's complaint.
Al Braikan had allegedly bought millions of Harman shares, and received a huge windfall when a US website picked up the report, sending the stock's price up by almost 40 per cent. The price went back down after the company denied the report an hour later, but the SEC claimed that al Braikan was able to reap massive profits.
"According to the allegations … al Braikan fabricated the press release over the weekend of July 18 to 19, 2009, scouring the internet for an appropriate graphic logo for his fictional entity and preparing various drafts of the hoax release, which he then faxed or e-mailed to various news organisations in the US and abroad," the SEC said. "He also made dozens of calls to various media outlets in the US and abroad in an attempt to convince them to pick up the story."
Al Braikan used a similar tactic in April last year to inflate the share price of Textron, the SEC alleged.
He died of a gunshot wound at his home in Kuwait in July last year, aged 30, just a week after the SEC lodged its complaint. The court appointed his brother Waleed to represent him after his death.
United Gulf Bank, originally named as a defendant by the SEC, has been cleared of charges and excluded from the case. As a condition of the settlement, none of the defendants admitted or denied the allegations.
Representatives of al Braikan, KAMCO and Al Raya did not return requests for comment.
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- Use unique usernames and passwords while enabling multi-factor authentication.
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COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
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List of alleged parties
May 15 2020: PM and Carrie attend 'work meeting' with at
least 17 staff members
May 20 2020: PM and Carrie attend 'bring your own booze'
party
Nov 27 2020: PM gives speech at leaving do for his staff
Dec 10 2020: Staff party held by then-education secretary
Gavin Williamson
Dec 13 2020: PM and Carrie throw a flat party
Dec 14 2020: London mayor candidate Shaun Bailey holds staff party at Conservative
Party headquarters
Dec 15 2020: PM takes part in a staff quiz
Dec 18 2020: Downing Street Christmas party
What can you do?
Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
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Investments: Grants/private funding
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