Wednesday, July 6, 2022
Editor's PickWahed addresses SEC charges

Wahed addresses SEC charges

Wahed Invest’s Global Risk Officer Umer Suleman, who is also the general manager of the firm’s UK business, has publicly addressed the charges brought on by the US Securities and Exchange Commission (SEC) against the firm.

“While Wahed cannot publicly deny the allegations, Wahed does not accept or admit to them as accurate, truthful or complete findings of law or fact. Most importantly, true or false, the settlement agreement generally relates to activity that occurred around three years ago. The organization, both in the US and abroad, has grown and matured on a number of different fronts. Wahed has invested heavily in growing our risk, legal and compliance teams. These changes will be shared in another update in the coming days,” Umer wrote.

Last week, the US regulator revealed that it took actions against the Halal robo-adviser for “making misleading statements and breaching its fiduciary duty, and for compliance failures related to its Shariah advisory business”, resulting in a US$300,000 fine. Read more here. The SEC further noted that Wahed Invest also failed to adopt and implement written policies and procedures addressing how it would assure compliance with Shariah law on an ongoing basis.

“The SEC allegation with respect to written policies are not an allegation against our Shariah compliance, but an assertion as to sufficient under US law,” Umer explained. “The SEC does not determine Shariah compliance and its allegation does not purport to do so (it only speaks to ‘written’ policies as it understood the purification aspect of our Shariah compliance).”

Umer wrote that Wahed’s Shariah compliance “has been determined through rigorous review by it Shariah advisors and Shariah board who (while not reviewing it for US law matters) have never questioned the sufficiency of our policies or real operational practices”. Wahed’s portfolio is certified Shariah compliant by Bahrain-based Shariyah Review Bureau.

Umer added that the firm is using this as an opportunity to double-down on its approach to corporate governance.

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