Working in Riba institutions : work in investment management company

Fatawa Question

[Question one] : Assalamu Alaikum Dr. Monzer, JazakAllahu Khairan for your response to my fiancé in regards to the condo purchase as well as my current position within Finance. I would like to shed a little more light on what I do to better suit a response tamed to my particular position. For the past 5 years, I have worked in the back office of investment management at state street. I had been settling trades, booking trades and covering risk within collateral management. Our back office functions related to all of PIMCO's derivative trades with their respective counterparties. I found a little comfort in knowing that Mohamed El-Erian, a Muslim from Egypt, was the CEO along with Bill Gross. I attached an article about Islamic finance from my time at state street which I believe couldn't be done had there been no Muslims in American finance. I decided that I needed a change of venue and moved to a firm in LA in which I would not be involved in every aspect of post trading tasks. My position in LA is within the middle office. I primarily deal with reviewing contracts to determine eligibility, fulfill Dodd-Frank requirements (new regulatory implementations), account agreement setup and send reports to respective counterparties which have payments settling. I do not take part in sending or receiving money, the custodian banks and brokers take care of that. I used to book hundreds of trades a day and now I book just a few, if any, a week. These are fixed income products. I am not a trader, I just receive the allocation from the traders and book them. I also audit trades, ratings and agreements. My functions fall under financial operations and not as an advisor or investment manager. Please advise the permissibility of my functions within my current position. [Question two] : Jazakallahu Khair for your response to my question. I seek to attain much more knowledge on Islamic guidelines within finance and was wondering if you would suggest any good reads from respectable scholars. I am having a difficult time determining whether the authors of books which I have read are indeed in a position to make accurate judgment or are respectable scholars. I read a book this past Friday at the masjid bookstore and was wondering if you could shed some light into what the author had to state about certain debt instruments. I will try to get the authors name InSha Allah this Friday when I go back. Don’t tell me the name, I don’t like to give opinion on people or institutions 1. The author stated that it is okay to finance a tangible asset such as a home using a fixed rate because the price is agreed (including the rate) at purchase but the payments are spread across a term. Does the fact that a commodity is added to the mix change the definition of Riba ? 2. I found something similar on this site, should I trust this ? http://www.islamweb.net/emainpage/index.php ?page=articles&id=135440 I think it is more of misunderstanding than wrong. You can lease purchase a house ending up getting it completely after a period of time. The lease is fixed. You can also buy it on installment at a price higher than the cash price, the increment is also fixed. Riba is an increment in a debt not a price differential for time. Price differential for time is a true benefit which has its real existence in reality and it is recognized in Shari’ah. But debts do not increase by passage of time. The difference sometimes loos trivial but it is still there. Goods and assets have different values across time but debt does not. Remember in any legal system there are lines to be crown between what is permissible and what is not and sometimes the difference looks very slim between points around the lines. Getting a debt to buy a house for 100000 and then paying to the creditor 120000 later looks close to buying a house on deferred payment for 120000. But if you think about it you will find important differences. 3. The author stated that government related bond instruments are permitted because the "interest" you pay is back to the community, and not for profit of investors (sort of like a tax I'm assuming). I never heard this before except in the context of paying back a loan to your own 401K with interest. Any thoughts ? This is incorrect and no evidence for it exists On a side note, have you heard of Sheikh Yusuf Talal DE Lorenzo http://muslim-investor.com/mi/bio-delorenzo.phtml ? I read the below article but wanted to make sure the author is credible. Have you heard of this website below ? He mentioned Shaykh Hasan al Banna and Shaykh Muhammad al Ghazali but didn’t provide a reference. http://muslim-investor.com/answers/working-for-a-bank.html Yes but no comment It truly means a lot that you have gone out of your way to assist me in my pursuit for knowledge. May Allah SWT bless you for your efforts ? I read your article on "The early Islamic public revenue system" and found it to be very informative. I love the extensive research and references. I find your website to be a very good source of knowledge as well. Thank you and May Allah bless you Jazakallahu Khair, Sabih

Fatwa

Click hereto view more

Publication Date

2012-12-04

Main Subjects

Financial and Accounting Sciences
Islamic Studies

Topics

• Islamic jurisprudence
• Investments
• Labour
• Corporations

No. of Pages

4

Data Type

Fatawa

Language

English

Record ID

BIM-730576

• APA
• MLA
• AMA