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  • Writer's pictureAkram Cheik - Lawyer

Trading scams in the United Arab Emirates

Warning about fraudulent behavior related to trading.



There are many scams that can be set up by online trading training companies. In particular, many companies unable to comply in France with regard to legislative obligations, find refuge in Dubai to circumvent the rules of the monetary and financial code, but also the obligations imposed by consumer law. To illustrate, here are some examples of unscrupulous trading companies found in Dubai:


Trading companies offering free training hide considerable fees: Some companies offer free training offers, but they may later charge hidden fees, such as software or hardware fees, or require the purchase of products or additional services to continue training.


Trading companies making promises of easy wins and quick results: Some companies may make unrealistic promises of quick wins and results, in an attempt to deceive customers into purchasing their products or services.


Falsified or purchased testimonials: Some companies may use fictitious testimonials or purchase positive reviews on online rating sites in an attempt to portray a positive image of their products or services. In particular, promises of extraordinary gains in the short, medium and long term. However, it should be noted that in most cases subscribers lose their money, and even worse, their loss remunerates the platforms and the people responsible for making them subscribe.


So, many websites and ads are fraudulent: Some companies may create fraudulent websites or ads that look like official sites or ads, in an attempt to deceive customers and take money from them.


Therefore, it is important to exercise caution when looking for online trading training and not to be fooled by overly tempting offers or promises of easy gains. It is recommended that you research a training company carefully before entrusting funds or engaging with them. Therefore, several points must attract the subscriber's attention regarding the sites or direct sellers (I), furthermore, criminal offenses linked to trading activities must also be the subject of particular attention (II).



I – The different points of vigilance concerning trading website



A – Notices and general conditions of contract


It is important that a website includes legal notices and general conditions of contract for several reasons:


Legal notices allow users to know essential legal and administrative information about the website, such as its publisher, contact details, company name, VAT number, etc. They also allow users to know the conditions of use of the site and the rights and obligations arising therefrom.


The General Terms and Conditions define the terms of sale and provision of services offered on the website. They allow users to know the conditions of price, payment, delivery, warranty, liability, etc., which apply when they purchase a product or service on the site.


Legal notices and T&Cs are mandatory for any website offering products or services online in France and many other countries. Their absence may result in legal sanctions for the site publisher.


Finally, the legal notices and General Terms and Conditions allow users to know the rights granted to them and to assert them in the event of a dispute with the site editor. They thus contribute to trust and transparency between the publisher and users of the site.


B – The ban on trading for a third person in European countries


The monetary and financial code prohibits in European countries that a person does trading for another, that is to say that he carries out stock market transactions on behalf of a third party, for reasons of protection of the investor.


Indeed, trading can be a complex and risky activity, which involves making important decisions regarding the purchase and sale of financial products. It is important that the investor is able to understand the issues and risks linked to these decisions and that he himself assumes responsibility for them.


If one person is trading for another, it can create confusion about who is responsible for the investment and the decision to take risks. It can also lead to conflicts of interest, if the person trading for another has interests that diverge from those of the investor.


Furthermore, the monetary and financial code imposes specific obligations on persons who carry out trading activity on behalf of others, such as the obligation to obtain special authorization and to follow strict risk management rules. These obligations aim to protect investors and guarantee the transparency and quality of trading activity.




II- The different offenses linked to trading



A – Breach of trust or fraud in trading matters


The offenses of breach of trust and fraud are criminal offenses that can be committed in the context of trading. Breach of trust involves misappropriating funds or property that have been entrusted to a person because of their position of trust, while fraud involves deceiving a person to obtain an illegitimate advantage.


The two offenses are distinguished during the remittance of the initial funds which will allow the investment in trading. Indeed, with regard to the offense of breach of trust, the delivery of funds must be precarious, in addition, the person in charge of investing for the subscriber recovers the funds but is responsible for returning them often by promising a gain. obtained by the trading ticket, therefore by multiplying the sum by an amount x defined in advance percentage.


While the offense of fraud assumes that the person making the promise of winning attracts the subscriber through fraudulent maneuvers in order to cause the latter to remit the funds.


With regard to the two offenses, despite the question of the hazard linked to this activity there is little doubt that, people receiving funds in precarious circumstances or fraudulent maneuvers, on the one hand often do not have the possibility of obtain the fruits of trading, on the other hand even if they obtain positive results they would not intend to pass them on to subscribers in the long term.



B - Insider trading


Insider trading is different from the two previous ones, is an offense which consists of using privileged information to carry out financial transactions on the financial markets. In the United Arab Emirates, insider trading is governed by the Federal Financial Markets Law enacted in 2000.


According to this law, insider trading is defined as any act by which a person uses inside information to carry out financial transactions on financial markets, or induces another person to do so. Inside information is confidential information that has not yet been made public and which may influence the prices of securities in financial markets.


The penalty for insider trading in the UAE is imprisonment and/or a fine. The length of imprisonment and the amount of the fine depend on the seriousness of the offense.


If in doubt, do not hesitate to contact Nextcap to advise you and avoid any disappointments with unscrupulous traders.


Akram Cheik, Lawyer


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