Asalamualaikum,
I have been using Wahed Investâs 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?
Sharjeel
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 Shariâah 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 Shariâah compliance on an ongoing basis.
Walaikum as salaam @Sharjeel_Zahid. Welcome to the community and thanks for posting.
I also added @hkirefuâs thread to this topic as well to keep the conversation in one place.
Obviously, itâs an issue. But personally, whilst itâs not right, given itâs a small start-up Iâm not entirely surprised.
I see it as an unintentional errorâŚthings go wrong in business it happens.
I also personally know their new CMOâŚappointed last yearâŚvery good guy ma sha Allah.
âunintentional errorâ
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 âforgettingâ 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 broâŚyour points are fairâŚjust want to say two things:
HoweverâŚwhat sometimes happens in companies, especially small high growth new companies, is that things get missed, people make errors, someone leaves and the replacement doesnât have a set of instructions, communication across departments isnât great because everything is new etc. etc. etc.
Like I say, I was actually expecting errors - itâs the same across the Muslim finance space. Not because anyone intended it, just because wellâŚthatâs life itâs normal. And I donât even know anything about what goes on behind the scenes at this particular company.
So, if Iâm high up in that companyâŚIâve probably got equityâŚwhy would I risk all my hard work? If I wanted to lie about something, Iâd lie about very different than this stuff. Makes zero sense to me for it be intentional.
Donât get me wrong - Wahed aint perfectâŚfor instance showing past performance starting from 2010âŚthat just isnât ethical in my view when dealing with retail investorsâŚeven if it is ânormalâ in the investing space. But hey, thatâs boring so no-ones talking about it.
Full disclosureâŚI have nothing to do with WahedâŚnot employed there, donât own any equity, I only have less than ÂŁ200 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 itâs better to work with it along its journey.
Feel free to reply no problemâŚyou can have the last wordâŚand if itâs from the best of mankind like last timeâŚeven better!
Love and respect to you all!
At first glance, something doesnât 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 donât particularly like Muslims and some of them will be in Wall Street / SEC. Not saying I automatically assume bias at play, but canât 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 itâs 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 donât need the SEC to tell us what is or isnât Sharia compliant.