The Financial Regulatory Authority (FRA) rejected yesterday Beltone Financial’s appeal of a six-month suspension handed to its investment banking arm over alleged irregularities in the IPO of consumer- and structured-finance player Sarwa Capital, Al Mal reports. The FRA alleges that Beltone inflated subscription figures in the bookbuilding process and claims that the institutional offering was only covered once — not 10x oversubscribed as Beltone had announced at the time. The authority also alleges that Beltone failed to abide by a rule that bars the allocation of shares to investors who subscribe to 10% or more of the listing company’s shares, according to the newspaper.

Naguib Sawiris is “disappointed” in the ruling and in the FRA’s “failure” to address Beltone’s defense against the allegations, he said in a statement. The suspension has only served to shake investors’ confidence in the EGX and has called the authority’s impartiality into question, Naguib said, adding that Beltone will continue to pursue legal action against the decision. Sawiris is the chairman of Orascom Investment Holding, which owns Beltone Financial. Sawiris also suggested the FRA action was motivated by personal animosity.

Next move: An administrative court will hear an appeal by Beltone on Saturday, 5 January.

Background: The FRA had imposed the suspension after Sarwa Capital’s shares plunged on the first day of trading, prompting an investigation into the transaction. Beltone has denied the allegations with some backup coming from Misr for Central Clearing, Depository & Registry and the Egyptian Capital Markets Association.