We will lay out the facts concerning Zachary Cefaratti’s Dalma Capital Management Limited in this piece of content. Come on, let’s shed some light on the important aspects of this company as well as its owner that genuinely need to be revealed. And later, it will be up to you to express your opinion on my views regarding this company.
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History of Dalma Capital Management Limited
Dalma Capital is an international venture capital platform and accelerator that focuses on alpha-generating strategies with a competitive edge in developing economies.
Dalma Capital, which was founded in 2011 and has its corporate office in the Dubai International Finance Centre, aims to find the next wave of ‘edge’ fund managers, strategies, and opportunities that generate alpha.
DFSA Notice to Owner of Dalma Capital Management Limited
First of all, we must understand what a DFSA-authorized firm is.
© 2023 The term “DFSA” stands for the Dubai Financial Services Authority, an organization created in accordance with Dubai law to serve as the independent supervisor of financial services and associated activities for the DIFC.
The Financial Markets Tribunal (FMT), where the parties will argue their individual positions, has been tasked with hearing this Decision Notice. Therefore, any conclusions in this Decision Notice are merely the DFSA’s opinion of what happened and how the conduct should be characterized, and they are only preliminary.
Why did the DFSA choose to notify Dalma Capital Management Limited?
- The Dubai Financial Services Authority (DFSA) has determined the following for the reasons stated in this notification (the notification):
- to impose on Mr. Cefaratti a fine of $300,000 (Fine) in accordance with Section 90(2)(a) of the 2004 Regulatory Law;
- to restrict Mr. Cefaratti from holding office in or working for any Authorised Person, DNFBP, Reporting Entity, or Domestic Fund (the Prohibition), in accordance with Article 90(2)(g) of the Regulatory Law 2004;
- to place a restriction on Mr. Cefaratti in accordance with Article 59 of the Regulatory Law 2004 prohibiting him from carrying out any function associated with the provision of financial products or services in or from the DIFC (Restriction);
- that it objects to Mr. Cefaratti continuing to serve as the supervisor of Dalma Capital Management Limited (Dalma) in accordance with Article 64(2)(c) of the Regulatory Law 2004, as he is no longer acceptable to the DFSA.
- In light of this, and in accordance with Articles 64(3)(b) and 64(4)(c) of the Regulatory Law 2004, the DFSA orders Mr.Cefaratti.
- The Financial Markets Tribunal (FMT), where the parties will argue their individual positions, has been tasked with hearing this Decision Notice. The DFSA’s assessment of what happened and how it thinks the behavior should be described is reflected in any conclusions in this Decision Notice, which are thus tentative.
- The FMT will decide what action, if any, the DFSA should take and remit the issue to the DFSA with any instructions it deems necessary to carry out its decision. The FMT’s verdict will eventually be made available to the public on the DFSA website’s FMT section.
- Because Mr. Cefaratti was knowingly involved in Dalma’s violations of the following transgressions, as defined by Article 86 of the Regulatory Law 2004, the DFSA determined that he had violated the law.
2.) The Prohibition and Restriction shall be effective as of the date thereof.
3.) Only Mr. Cefaratti is the recipient of this notice. The conclusions stated in this Notice are without consequence to the positions of any third parties or the DFSA with respect to any third parties, and nothing in this Notice indicates a determination that anybody other than Mr. Cefaratti and Dalma Capital violated any law or Rule.
Only Mr. Cefaratti is the recipient of this notice. The conclusions stated in this Notice are without consequence to the positions of any third parties or the DFSA with respect to any third parties, and nothing in this Notice indicates a determination that anybody other than Mr. Cefaratti and Dalma violated any law or Rule.
4.) Since 7 August 2016 and as of 30 June 2016, Mr. Cefaratti has held the positions of Senior Executive Officer (SEO) and Licensed Director for Dalma. He had been Dalma’s Risk Officer up until January 10, 2015, when he was promoted to Chief Operating Officer (COO).
5.) Mr. Cefaratti was ultimately in charge of managing, supervising, and controlling Dalma’s Financial Services operations conducted in or out of the DIFC while serving as SEO.
- 1 Between 5 April 2016 and 6 June 2016 (the Trading Period), Dalma Capital organized and allowed transactions to be executed on behalf of one of its funds (the Dalma Fund) by a person who lacked the necessary training and experience, as well as by someone who was not Dalma’s employee or otherwise bound by the contract. According to Rule 4.2.2 of the General Module of the DFSA Rulebook (GEN), Dalma Capital violated Principle 2 of the DFSA’s Principles for Authorized Firms by failing to execute its commercial activities with due skill, care, and diligence.
- According to Article 66 of the Regulatory Law of 2004, Dalma Capital gave the DFSA false, misleading, and deceptive information about the trading conducted by the person mentioned in paragraph 5.1 above between 14 August 2017 and 5 July 2018 (the Notice Response Period), and concealed information with the intent to mislead or deceive the DFSA.
6.) The DFSA has also discovered that Mr. Cefaratti continued to give false, misleading, and deceptive information and to conceal information in order to mislead the DFSA during three separate under-oath interviews with the DFSA regarding the matters mentioned in paragraph 5.1 above, in violation of Article 66 of the Regulatory Law 2004 between 18 April 2019 and 31 July 2019 (the Interview Period).
7.) In addition, Mr. Cefaratti had to adhere to the DFSA’s Authorized Individuals’ Principles in GEN Section 4.4 while acting as an Authorised Individual during the Notice Response Period and the Interview Period. The DFSA has determined that Mr. Cefaratti violated the terms of his license while performing his Licensed Functions, as evidenced by the conduct that led to such violations (see paragraphs 5.2 and 6 above).
- violated GEN Rule 4.4.1’s Principle 1 (Integrity) by failing to uphold the highest standards of honesty and fair dealing;
- GEN Rule 4.4.4’s Principle 4 (Relations with the DFSA) was broken when the party in question failed to communicate with the DFSA in an honest and cooperative way or failed to disclose information to the DFSA properly.
8.) The DFSA believes that imposing the Fine, Prohibition, and Restriction on Mr. Cefaratti is justified in the circumstances given the kind and gravity of his violations as well as the length of time over which they occurred.
9.) The DFSA believes that even with the Restriction and Prohibition in place, Mr. Cefaratti would still be able to exert a significant amount of control over Dalma Capital because he is the most significant single Controller of Dalma Capital. The DFSA believes it is reasonable to impose the Disposal Direction on Mr. Cefaratti given his violations’ nature and degree, as well as the length of time during which they occurred.
What is DFSA?
The Dubai Financial Services Authority (DFSA) is Dubai’s financial regulator, operating exclusively within the Dubai International Financial Centre economic zone. It sets international standards for financial regulation, separate from the UAE’s federal Securities and Commodities Authority, which oversees the broader UAE outside DIFC.
10.) Defined terms are indicated in this Notice by the capitalization of the first letter of each word or phrase, and they are defined in Annex C or the DFSA Rulebook Glossary Module (GLO), respectively. A phrase’s natural meaning is preserved when the initial letter is not capitalized unless the context clearly dictates otherwise.
11.) An individual who was a former senior management member of Dalma Capital and managed Dalma during the Trading Period is referred to several times in this Notice as (Senior Manager 2).
ASSUMPTION OF FACTS AND MATTERS
12.) Since July 7, 2016, Mr. Cefaratti has served as the SEO for Dalma Capital. He has also been a licensed director since June 30, 2016. Prior to that, he served as the Risk Officer. On January 10, 2015, he was appointed Chief Operating Officer.
13.) The DFSA authorized the Firm on March 20, 2014, designating it as a Category 3C Authorized Firm with a license to offer the following Financial Services. The Firm manages funds and offers alternative investment platforms.
- Providing Financial Product Advice
- Arranging and Advising on Credit
- Organizing Investment Deals
- Managing Resources
- Controlling a Collaborative Investment Fund
14.) Under the terms of an investment management agreement, Dalma oversaw the Dalma Fund during the Trading Period. The Dalma Fund was a collective investment fund with a foreign base that was set up under the laws of Malta as a multi-fund investment company with variable share capital.
The Fund was granted a license by the Malta Financial Service Agency as a Professional Investor Fund with a sub-fund that was intended for Qualified Investors.
Dalma oversaw the Dalma Fund’s assets during the trading period.
The DFSA exercised its authority under Article 73 of the Regulatory Law 2004 to request documents and information from Dalma in response to inquiries resulting from the DFSA’s supervision of Dalma.
These inquiries related, among other things, to Dalma’s communications and interactions with a non-regulated company registered in the DIFC (Company X). This was accomplished through the use of a notification dated July 23, 2017, addressed to Mr. Cefaratti in his capacity as Dalma’s SEO (the First notification).
Role Of Dalma Capital as a Shareholder
Check out the shareholder-level connectedness of Dalma Capital in the following screenshot:
Dalma Capital SICAV plc’s License Denial
The purpose of this notice is to inform the public that Dalma Capital SICAV plc (“the Scheme”) recently asked the Malta Financial Services Authority (“MFSA”) to accept the forfeiture of the collective investment scheme license given to the Dalma Unified Return Fund (“the Sub-Fund”).
The request from the Scheme was granted by the MFSA. This surrender has been made completely voluntarily and is not related to any regulatory action the MFSA has taken. The Sub-Fund was consequently no longer approved by the MFSA as of November 22, 2018.
Well, what do you think about the schemes of Dalma Capital? Are they reliable for investment or trading?
The Financial Markets Tribunal was notified of DFSA resolutions to fine Dalma Capital Management Limited and Zachary Cefaratti
Let’s talk about the sanctions imposed on the Dalma Capital as we move forward.
Two Decision Notices about actions the Dubai Financial Services Authority (DFSA) has chosen to take against Dalma Capital Management Limited (Dalma), a DFSA Authorized Firm, and Mr. Zachary Cefaratti, the Senior Executive Officer and a Licensed Director of Dalma Capital, have been published today.
Both Mr. Cefaratti and Dalma disagree with the DFSA’s conclusions, and they have both submitted the Decision Notices to the Financial Markets Tribunal (FMT), where the parties will argue their individual positions. Decisions made by the DFSA are therefore tentative and reflect how the DFSA perceives Mr. Cefaratti and Dalma’s behavior.
In addition, Mr. Cefaratti was fined $300,000 by the DFSA, while Dalma was fined 170,000 USD. The DFSA further barred Mr. Cefaratti from holding any positions of authority inside or on behalf of a regulated DIFC firm, as well as from working in any capacities associated with the delivery of financial services to or from the Dubai International Financial Centre (DIFC). Additionally, Mr. Cefaratti was mandated by the DFSA to sell his shares of Dalma within a set time frame.
Since Mr. Cefaratti gave the DFSA an enforceable undertaking that he would take a leave of absence from his Dalma Authorised Individual Functions.
The DFSA postponed the implementation of the fines against Dalma and Mr. Cefaratti until the conclusion of FMT’s review. Additionally, he gave his consent to leave monies with a domicile in the DIFC. Despite being an EU member, Mr. Cefaratti can still help Dalma in order to maintain commercial operations.
The FMT decided what if any, appropriate action the DFSA should take in regard to Dalma and Mr. Cefaratti and will send the issue to the DFSA with any directives it deems necessary to give expression to its decision. The FMT’s assessment might either validate, modify, or reverse the DFSA’s conclusions.
As a result of Dalma’s failure to execute its company’s operations with the necessary skill, the DFSA determined to initiate action against Dalma. Between 5 April 2016 and 6 June 2016, Dalma Capital organized and approved trades to be executed on account of one of its funds (the Dalma Fund) by a person who was not employed by Dalma nor otherwise contractually obliged to Dalma, and who lacked the necessary training and expertise.
Furthermore, according to the DFSA, Dalma gave false, misleading, and misleading details to the DFSA and hid information on the trade conducted by the person mentioned above so as to deceive or confuse the DFSA.
As a result of Mr. Cefaratti’s knowing participation in Dalma’s illegal behavior, the DFSA decided to take action against him for violations of DFSA legislation.
According to the DFSA, Mr. Cefaratti was intentionally complicit in Dalma’s failure to carry out its business operations with the necessary skill, care, and diligence. He was in charge of Dalma’s operations, including how the Dalma Fund was administered, as Dalma’s Chief Operating Officer at the relevant time. He also gave the trader access to the Dalma Fund’s online trading site and helped him with his trading.
As the SEO at the time, Mr. Cefaratti was ultimately accountable for the information given to the DFSA because the DFSA discovered that he was knowingly complicit in Dalma’s false and fraudulent conduct.
Additionally, the DFSA chose to take action against Mr. Cefaratti because, in the DFSA’s opinion, Mr. Cefaratti gave the DFSA false, misleading, and deceptive information during three consecutive under oath interviews between April 18 and July 31, 2019.
According to the DFSA, Mr. Cefaratti violated high norms of honesty and fair dealing as an Authorised Individual and failed to interact with the DFSA in an honest and cooperative manner.
All of the claims made by the DFSA are refuted by Dalma and Mr. Cefaratti.
The specific DFSA Decision Notices dated 19 October 2021, which are available in the Enforcement Decision Notices section of the DFSA website, outline the DFSA’s reasons in detail for taking action against Dalma and Mr. Cefaratti.
After the DFSA levied penalties on Dalma Capital & its owner, you would undoubtedly be interested to know what occurred next. What conclusions can you draw from the outcome? Come on, let’s find out.
Financial Markets Tribunal decreased the penalty levied but affirmed the DFSA’s finding that Zachary Cefaratti and Dalma Capital Management Limited had deceived the agency
The Dubai Financial Services Authority (DFSA) took enforcement action against Dalma Capital Management Ltd. (Dalma) and its Senior Executive Officer (SEO), Mr. Zachary Cefaratti, for misleading the DFSA and failing to conduct Dalma’s business activities with due skill, care, and diligence, and the Financial Markets Tribunal (FMT) has largely upheld this action in a majority decision.
Each was sentenced to a punishment of USD 162,500, which was lower than the DFSA’s original fine recommendations of USD 170,000 for Dalma and USD $300,000 for Mr. Cefaratti. In addition, Mr. Cefaratti will have a two-year ban on serving as Dalma’s SEO.
At first, the DFSA had suggested that Mr. Cefaratti be subject to ban and limitation orders. Though the FMT decided to impose such orders, it also determined that they would be postponed for two years provided that Mr. Cefaratti complied with its Order throughout that time.
Following a four-day hearing in September 2022, the FMT’s decision was released on January 31, 2023, and it was confirmed that Mr. Cefaratti and Dalma had given the DFSA information that they knew to be false or misleading and had omitted to disclose the critical important information that a person had been trading on the Dalma Unified Return Fund from April to June 2016.
Additionally, it was determined that Mr. Cefaratti had violated Principles 1 and 4 for Authorized Individuals by failing to act with the utmost honesty and cooperating with the DFSA. Although the DFSA had earlier claimed that the person conducting the in-question trading lacked both qualifications and experience, the FMT found that the DFSA had not proven its point in this respect.
The FMT stated: “Mr. Cefaratti didn’t simply lie to the DFSA; he proceeded to lie to them throughout a protracted investigation, and then he lied to the Tribunal as well and needlessly subjected us all to an expensive appeal process. He might have simply “fessed up” and shown regret much earlier.
The FMT made a comment about the penalties imposed on Mr. Cefaratti, saying that ordinarily, persistent deceit would prompt instantaneous judgments of restriction and limitations.
However, in this case, the FMT decided that it was appropriate for orders of restriction and prohibition to be suspended for two years, given Mr. Cefaratti’s continued employment with Dalma and the fact that he admitted his guilt (albeit much too late). This is subject to Mr. Cefaratti adhering to an order restricting his activities at Dalma.
While it works to secure DFSA authorization for a person to serve as SEO during Mr. Cefaratti’s restriction, Dalma has appointed a person to fill the position of SEO temporarily.
Get Justice Suspicious
The DFSA’s chief executive, Ian Johnston, stated: “As the FMT stated in this instance, the DFSA can only function as a regulator if market players act with integrity and are transparent and helpful. This is reflected in the FMT’s declaration that a fine for deceiving the DFSA will be fixed with a beginning range of USD 125,000 to USD 150,000.
Dalma and Mr. Cefaratti violated their obligation to be truthful and open with the DFSA over a period of years, and they made matters worse by continuing to deny the violations up until the Tribunal’s decision. The DFSA will continue to take tough action when corporations and people deceive us because this behavior is unacceptable.
The Owner of Dalma Capital: Zachary Cefaratti
Dalma Capital Management Limited was founded in its entirety by Zachary Cefaratti. Zachary has more than 15 years of experience in the financial services sector.
He initially worked his way through the Foster School of Business at the University of Washington, the London School of Economics, and the University of Pennsylvania while running his own independent mortgage brokerage, merchant, and insurance businesses. He has a bachelor’s degree in both global finance and banking and global business management.
At age 7, Zachary started trading bonds and stocks in an effort to increase the value of the money he had made as a SAG/AFTRA actor in children’s films and television.
This was the start of his quest for alpha. He founded the Franklin University Investment Club and was a driving force behind the creation of the AIMA Middle East Executive Committee, which serves as the Alternative Investment Management Association’s representative in the MENASA region. He has been an active member of the investment community throughout his career and education.
I don’t have much more to say about Dalma Capital and its cases now that I’ve shown you all the information above. You can now envision the framework of this business in your head, and it will undoubtedly be unfavorable. What do you think about him and the penalized Dalma Capital that he controls?