What lessons can be learnt from the SEC’s actions against Wahed Invest?
Wahed Invest was fined $300,000 by the US’ SEC for misleading customers in early February. As a poster-boy of the Islamic finance sector, how can the robo-advisory regain consumer trust?
London: Earlier this month, the Securities and Exchange Commission (SEC) charged New York-based Islamic investment platform Wahed Invest for making misleading statements and breaching its fiduciary duty, and for compliance failures related to its Sharia advisory business.
In summary, the SEC said Wahed advertised proprietary funds which did not exist; ensured investors that Wahed would periodically rebalance customers’ advisory accounts but did not rebalance customers’ advisory accounts; launched a proprietary Exchange Traded Fund (ETF) with customers’ advisory assets without customers’ consent for their assets to be used to fund the ETF; and did not adopt and implement written policies and procedures addressing how it would assure Sharia compliance on an ongoing basis.
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