I have been using Wahed Invest’s services to invest in their Shariah compliant ETFs - $HLAL and $UMMA. Today I saw a new press release from the SEC that they have been fined for misleading clients.
SEC.gov | SEC Charges Robo-Adviser with Misleading Clients
Is there any cause for concern?
As I have stated in another post, Certificates do not certify compliance.
The order also finds that Wahed Invest marketed itself as providing advisory services compliant with Islamic, or Shari’ah law, including marketing the importance of its income purification process on its website. Despite these representations, the order finds that Wahed Invest did not adopt and implement written policies and procedures addressing how it would assure Shari’ah compliance on an ongoing basis.
Walaikum as salaam @Sharjeel_Zahid. Welcome to the community and thanks for posting.
I also added @hkirefu’s thread to this topic as well to keep the conversation in one place.
Obviously, it’s an issue. But personally, whilst it’s not right, given it’s a small start-up I’m not entirely surprised.
I see it as an unintentional error…things go wrong in business it happens.
I also personally know their new CMO…appointed last year…very good guy ma sha Allah.
If you miscalculated debt/equity, if you picked up the wrong sic code for industry classification due to a programming error, those can be unintentional errors. Can “forgetting” not to apply policies and procedures that are the foundation of your product and your only differentiation from mainstream investment platforms be unintentional?
Two points here bro…your points are fair…just want to say two things:
- If this was some big company with very established policies and procedures, and employees who had been there for years etc. etc. I’d be inclined to agree with you.
However…what sometimes happens in companies, especially small high growth new companies, is that things get missed, people make errors, someone leaves and the replacement doesn’t have a set of instructions, communication across departments isn’t great because everything is new etc. etc. etc.
Like I say, I was actually expecting errors - it’s the same across the Muslim finance space. Not because anyone intended it, just because well…that’s life it’s normal. And I don’t even know anything about what goes on behind the scenes at this particular company.
- It also kinda doesn’t make sense for this to be intentional. Why would a company that advertises itself as they do, intentionally do these things? If someone proved it was intentional, it would be disastrous.
So, if I’m high up in that company…I’ve probably got equity…why would I risk all my hard work? If I wanted to lie about something, I’d lie about very different than this stuff. Makes zero sense to me for it be intentional.
Don’t get me wrong - Wahed aint perfect…for instance showing past performance starting from 2010…that just isn’t ethical in my view when dealing with retail investors…even if it is “normal” in the investing space. But hey, that’s boring so no-ones talking about it.
Full disclosure…I have nothing to do with Wahed…not employed there, don’t own any equity, I only have less than £200 invested in Wahed, and that was just because I was interested in it. Am only defending them because, well, we need Muslim fintech and so it’s better to work with it along its journey.
Feel free to reply no problem…you can have the last word…and if it’s from the best of mankind like last time…even better!
Love and respect to you all!
At first glance, something doesn’t seem right about this. Since when does the SEC care about Sharia compliance?
The SEC report leaves more questions than answers. I would need a detailed report of their investigation and rulebook they are following to be able to pass any judgement. There are some folks that don’t particularly like Muslims and some of them will be in Wall Street / SEC. Not saying I automatically assume bias at play, but can’t help wonder, and the only people that would better tell are people who studied other SEC judgements and know the details of this case.
Before this happened, I said the sharia compliance certificate left more questions than answers as well. So there are a lot of questions here and not enough answers.
As for the Sharia compliance question, this is where Zoya shows it’s value. The holdings of the ETF are no secret, so if they were unexcusable deviations from being halal outside of matters of differences of opinion, then we would have known about it. We don’t need the SEC to tell us what is or isn’t Sharia compliant.