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Clifford Chance

Clifford Chance

Briefings

DIFC Judge rules on the regulatory perimeter of the DFSA and suitability standards in Al Khorafi v. Bank Sarasin-Alpen and Bank Sarasin

1 September 2014

The DIFC Court of First Instance (the Court) has found Bank Sarasin & Co. Ltd, a Swiss incorporated bank with no registered presence in the Dubai International Finance Centre (DIFC), and its Dubai Financial Services Authority (DFSA) authorised DIFC subsidiary, Bank Sarasin-Alpen ME Limited (Sarasin-Alpen), in breach of the DIFC Regulatory Law with liability to pay compensation to the members of a family who purchased US$200 million of structured products, which were financed, in part, by loans from Bank Sarasin and from another bank.

The ruling of Sir John Chadwick addresses two areas of DFSA regulation: (1) how far does DFSA regulation extend, and (2) acceptable practice in treating customers fairly (i.e. assessing suitability) in relation to complicated financial products.

This briefing outlines the judgment of the DIFC Court and provides the key 'take-away' points for DIFC regulated banks and investment firms.

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