The DubaiFinancial Services Authority (DFSA) banned Kulvir Virk from working infinancial services within the Dubai International Financial Centre (DIFC),marking the second time in 18 months that a regulator has prohibited the formerSVS Securities chief executive from the industry.The DFSAmoved quickly after learning in November 2024 that Virk had become involvedwith a regulated firm in the DIFC despite being barred by the UK's FinancialConduct Authority (FCA) fivemonths earlier. Therestriction took effect immediately on December 9, preventing Virk fromperforming any function connected to financial services in or from the Dubaifinancial hub.The UK’s Scandal InvolvingSVS Securities Triggers International ActionVirk'stroubles stem from his role at SVS Securities, a UK fund manager that collapsedin 2019 after regulators discovered it had funneled £69.1 million ofcustomer pension funds into high-risk bonds. The FCA found that Virk designed abusiness model that prioritized company profits through undisclosed commissionsreaching 12% of customer investments.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 somecases. Atotal of 879 customers, most of whom had transferred existing pensionplans, lost substantial retirement savings."TheDFSA's role as the regulator of financial services in the DIFC includesensuring that there are high standards of integrity and fair dealing,"Alan Linning, Head of Enforcement at the DFSA, said in a statement. "Wewill continue to take action to ensure that those carrying out regulatedfunctions in our market are appropriate and that these high standards aremaintained."Complex Web of ConflictsThe FCA'sinvestigation revealed Virk repeatedly ignored warnings about conflicts ofinterest and regulatory compliance while running SVS between 2016 and 2019. Hepressed ahead with a 10% markdown on customer valuations despite being told itwasn't fair to clients, generating £359,800 in income for SVS at customerexpense.Virk alsoarranged for SVS to take a £750,000 advance from Innovation Capital FinanceLimited before conducting any due diligence on the investment, at a time whenthe FCA had already raised concerns about inadequate vetting of fixed incomeproducts. SVS had entered into an agreement to invest customer funds in ICFLbonds in return for £1 million in commission.The firmused unauthorized introducers who received commission of 7-9% for steeringcustomers toward SVS's model portfolios. More than half of SVS customers camethrough two financial advice firms that were controlled by individuals who alsoowned these introducers.Five-Year CleanupSVS enteredspecial administration in August 2019 after the FCA stopped its operations overconcerns about how it managed customer funds. The firm's client books were soldto ITI Capital, which struggled with technical difficulties during themigration. ITI later exited the retail business entirely.The specialadministration concludedin March 2023, nearly four years after it began. More than 99% of SVSclients transferredto ITI through a single bulk transfer in June 2020, though eight clients,including five corporate accounts, didn't receive full compensation becausetheir deposits exceeded Financial Services Compensation Scheme limits.The FCAfined Virk £215,500 in June 2024 and issued a permanent ban from UK financialservices. Two other former SVS executives, Finance Director DemetriosHadjigeorgiou and Head of Compliance David Stephen, received smaller fines andbans from senior management roles.This article was written by Damian Chmiel at www.financemagnates.com.