Broker scams in the UAE Investment Industry!

George Santayana, the Harvard philosopher, once observed that those who refuse to learn the lessons of history are doomed to repeat them. Yet lessons are rarely learnt by the pinstriped croupiers of the international and local financial casinos.

By Moneytalks By Matien Khalid

  • Follow us on
  • google-news
  • whatsapp
  • telegram

Published: Sat 17 Jun 2006, 12:58 PM

Last updated: Sat 4 Apr 2015, 4:44 PM

After all, the stakes are huge when fleeing the sheep, or taking the lambs to the slaughter in leveraged crapshoots in shares, stocks, scrips (ie toxic pieces of paper).

The idea is to peddle a hot concept with hot air, hype the paper casino, play mind games with millions of hungry, greedy Joe Schmoes who all itch to strike it rich with Lotto on Wall Street ,assorted bank lotteries masquerading as deposit savings schemes or the DFM. Conventional thinking would argue that investors listen to their "brokers" to advise them on "investing" in stocks and bonds.

Yet "brokers" (or financial consultants and private bankers depending on whether they wear suits from Raymonds de Bur Dubai or Emporio Giorgio Armani ) have a vested interest in fleecing you because they are paid on commissions which comes out of you rolling dice in the casino (ie buying pieces of paper they sell you based on "research" other sales guys in the home office with PC spreadsheets put out to con you to roll the dice. In UAE stockbroking, knowledge is not power , knowledge is Power Point.)

This means that even if you lose, Brokerji wins. If you win, Brokerji wins again. The broker only loses if you refuse to roll the rice and tell him to take a long walk on a short cliff or a one way ticket to Uranus. There is an existential conflict of interest between clients and their brokers. He may well be your financial doctor but he is a doctor who gets a fat cut every time he prescribes a pill to cure your financial ailments.

Broker scams are a dime a dozen in the UAE. First, there are the unlicensed commodities bucket shops who have been around for 20 years. Some of these guys used to be owned by Chinese Triads from Hong Kong. These guys hire a bunch of jobseekers on visit visas, housewives and even the occasional runaway maid with "contacts" to convince the luckless and witless Richy Rich dudes and dudettes of Dubai that a Pharoah's ransom awaits them punting in gold, silver, currency or orange juice futures. Joe Habibi opens an account, buys and sells like a dude possessed, gets hooked on speculating on the dollar, the yen, gold, poultry farm IPO's, whatever the green phosphorescent flicker of the Reuters screen whispers into Brokerji's cerebellum. Guys who are bank PRO mandoubs, supermarket clerks and Meena Bazaar Textile Market salesmen by day do a Clark Kent overnight, morph into chest beating, Big Swinging Gorilla Supermen, the alpha dude-duds of Dubai finance, George Soroses on the Creek.

But at the end of the day, who has the last laugh? The broker/bucketeer. Because he never enters your trades in a credible futures exchange like CME LIFFE or SIMEX. Brokerji knows nine out often schmucks will be wiped out in the futures market in a mere three months. So Brokerji aims to keep not just your commissions but profit from your losses too.

Fabulously profitably business models in global and regional finance are based on the mass stupidity of the public. The existence of casinos, stock brokerages lotteries and credit card empires are mathematical testaments to my argument. But not even Las Vegas, Macau and Monaco can match commodities bucket shops in Dubai for colossal, brazen,, in your face financial piracy. The ultimate broker scam? A former banking boss of mine, who served time for bank fraud in Jordan (yes, Club Fed, habibi, a place where the sun don't shine,) has now set up a brokerage house in Dubai. Hallelujah! God save the Queen and Jailbird Jerk's luckless clients.



More news from