The Dubai Financial Services Authority (DFSA) banned Kulvir Virk from working in financial services within the Dubai International Financial Centre (DIFC), marking the second time in 18 months that a regulator has prohibited the former SVS Securities chief executive from the industry.

The DFSA moved quickly after learning in November 2024 that Virk had become involved with a regulated firm in the DIFC despite being barred by the UK's Financial Conduct Authority (FCA) five months earlier.

The restriction took effect immediately on December 9, preventing Virk from performing any function connected to financial services in or from the Dubai financial hub .

The UK’s Scandal Involving SVS Securities Triggers International Action

Virk's troubles stem from his role at SVS Securities, a UK fund manager that collapsed in 2019 after regulators discovered it had funneled £69.1 million of customer pension funds into high-risk bonds. The FCA found that Virk designed a business model that prioritized company profits through undisclosed commissions reaching 12% of customer investments.

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The bonds, many operated by SVS directors and Virk's business associates, later defaulted. Customers are expected to recover only 20-35% of their investments in some cases. A total of 879 customers, most of whom had transferred existing pension plans, lost substantial retirement savings.

"The DFSA's role as the regulator of financial services in the DIFC includes ensuring that there are high standards of integrity and fair dealing," Alan Linning, Head of Enforcement at the DFSA, said in a statement.

"We will continue to take action to ensure that those carrying out regulated functions in our market are appropriate and that these high standards are maintained."

Complex Web of Conflicts

The FCA's investigation revealed Virk repeatedly ignored warnings about conflicts of interest and regulatory compliance while running SVS between 2016 and 2019. He pressed ahead with a 10% markdown on customer valuations despite being told it wasn't fair to clients, generating £359,800 in income for SVS at customer expense.

Virk also arranged for SVS to take a £750,000 advance from Innovation Capital Finance Limited before conducting any due diligence on the investment, at a time when the FCA had already raised concerns about inadequate vetting of fixed income products. SVS had entered into an agreement to invest customer funds in ICFL bonds in return for £1 million in commission.

The firm used unauthorized introducers who received commission of 7-9% for steering customers toward SVS's model portfolios. More than half of SVS customers came through two financial advice firms that were controlled by individuals who also owned these introducers.

Five-Year Cleanup

SVS entered special administration in August 2019 after the FCA stopped its operations over concerns about how it managed customer funds. The firm's client books were sold to ITI Capital, which struggled with technical difficulties during the migration. ITI later exited the retail business entirely.

The special administration concluded in March 2023, nearly four years after it began. More than 99% of SVS clients transferred to ITI through a single bulk transfer in June 2020, though eight clients, including five corporate accounts, didn't receive full compensation because their deposits exceeded Financial Services Compensation Scheme limits.

The FCA fined Virk £215,500 in June 2024 and issued a permanent ban from UK financial services. Two other former SVS executives, Finance Director Demetrios Hadjigeorgiou and Head of Compliance David Stephen, received smaller fines and bans from senior management roles.