Tahrir square in Cairo, Egypt on March 31, 2018. Photographer: Sima Diab/Bloomberg
Egypt’s market regulator filed a criminal case against officials at Beltone Financial for alleged wrongdoing during the initial public offering of a financial services company late last year, according to media reports.
The move is linked to a case filed by Beltone in the administrative court where it sought to reverse the Financial Regulatory Authority’s decision to suspend its investment bank unit’s operations for six months after the lackluster Sarwa Capital IPO. The regulator claimed wrongdoing in the book building for the firm that went public in October, and said it received complaints from investors about being allocated bigger stakes than they wanted.
Sarwa’s shares plunged as much as 19 percent in their trading debut, and have failed to rebound to anywhere close to the IPO price of 7.36 pounds ($0.41) even after Beltone’s parent Orascom Investment Holding bought a 30 percent stake in the company.
The FRA and Beltone’s Chief Executive Officer Bassem Azab declined to comment. Beltone’s lawyers Matouk Bassiouny didn’t respond to a message requesting comment. The company has repeatedly denied any wrongdoing in the IPO process, a position restated during the court session on Saturday, al-Borsa newspaper reported.
Days after the offering, the government postponed the first planned stake sales of state-run companies, in a move that was seen by analysts as a knee-jerk reaction to Sarwa’s float. Lawyers for the FRA said in the court hearing on Jan. 5 that Sarwa’s IPO was one of the reasons behind the decision to delay the government’s stake sale program.
Beltone has said the issue was largely linked to a lack of clear guidelines by the regulator when it came to the private placement process.
The court on Saturday passed the file to its advisory arm for review and set another hearing for Jan. 26.
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