Introduction: Legal Violations

Introduction to Legal Violations of firms Engaged in Shariah Finance

In this section, you’ll find resourced information by SEC lawyers, financial reporters, terror-financing experts and RICO experts on why and how Shariah Finance violates US Securities Law, and needs to be investigated by the SEC, US TSY and Congress.

American banks, law firms, insurance companies, financial consultants and credit card companied who engage in promoting Shariah Investments are in danger of violating civil and criminal US Securities laws.  To understand each U.S. Securities Law statue, which may be violated, and necessary remedies to US Law, please refer to the published Utah Law Review Article entitled: Shariah’s Black Box:  Civil and Criminal Violations of American Companies engaged in Shariah Finance.

What are the seven Federal Statutes that govern securities transactions and are not being enforced in the sale and marketing of Shariah investments?


There are principally seven Federal Statutes that govern securities transactions: the Securities Act of 1933; the Securities Act of 1934; the Trust Indenture Act; the Investment company Act of 1940; the Investment Advisors Act of 1940; the Securities Investor Protection Act of 1970; and the Sarbanes –Oxley Act of 2002.   

Also read Resource Materials on the left hand side of the StopShariahNow menu for published white papers, books and legal articles that address these legal violations in detail.


What appear to be Civil Violations of Companies engaged in Shariah Finance ?

Securities Fraud & Common Law Tort Action

Incomplete Disclosure: Omission of material facts that result in uninformed investor and consumer product/investment decisions.  The omission of these facts is misleading and results in consumers taking on more risk than they otherwise might.  Example:  Marketing Shariah Finance without disclosing that the Taliban operates under the same Shariah Law

Weak Transparency: Literally “unclear” marketing materials that are vague in descriptions also result in investors/consumers/stockholders taking on more risk than they realize or are willing to assume.  Example:   Mentioning that Shariah Investments donate a portion of profits to Shariah Charities, but not being clear that the definition of Zakat as per Shariah Law includes support of Jihad and feeding and clothing of Jihadi soldiers.

Poor Due Diligence:  Incomplete assessment of risk by a firm offering Shariah Investments results in risks both to the issuer or marketer of Shariah products AND increased risks to the end consumer or investor. Example:  Dow Jones, Citibank and HSBC’s failure to investigate and disclose the Jihadi background of one it’s paid Shariah Advisors (Taqi Usmani) exposes stockholders to Lawsuits and exposes investors to financial losses when this fact eventually is exposed.  Also, in the case of Shariah finance, investors become unknowing pawns and enablers of political movement Shariah-Islam that undermines that investor’s freedoms and way of life.


What appear to be Criminal Violations of American Companies engaged in Shariah Finance?

Racketeering (RICO):  To the extent that roughly several dozen of the most influential Shariah Finance “scholars” or “Authorities” control the way funds go in and out of the largest financial institutions in the world creates a pattern of predicate racketeering activity such as bank fraud, money laundering and/or material support of terror.

Material Support of Terror:  To the extent that firms engaged in Shariah Finance send money to Shariah Islamic Charities that are found to support terror and terrorism, this is a criminal violation of Section 2339(A) of Title 18 of the U.S. Code.

Anti-Trust and Collusion:  At present there are two dozen Shariah “scholars” who are held in high regard and sit on overlapping Bank Shariah boards, “independent” Shariah regulatory agencies like the AAOIFI and speak as experts at Islamic Financial Conferences all over the world.  This creates the risk of collusion of rules and industry standards in this new Shariah finance market. This also creates the risk of reducing competition and independent review of this new Shariah Finance market by shutting out newcomers.

Conspiracy to overthrow Government:  To the extent that Shariah Finance advisors retained by U.S. Businesses advocate the implementation of traditional and authoritative Shariah which requires the submission of America to Shariah-Islam through means of Jihad, they risk being charged with a violation of Section 18, U.S.C. 2385.

Take a look at the Federal Criminal Code 18 USC 2385 and you will find that 'Shariah law' falls under this category. Here is a portion of this law:

"Whoever organizes or helps or attempts to organize any society, group, or assembly of persons who teach, advocate, or encourage the overthrow or destruction of any such government by force or violence; or becomes or is a member of, or affiliates with, any such society, group, or assembly of persons, knowing the purposes thereof—"