Dubai-based Magellan Capital Limited has been cleared by the Dubai Financial Services Authority (DFSA) following a months-long investigation into the hedge fund startup, the firm has confirmed, according to a report by Bloomberg.

The probe, prompted by complaints from a former employee, alleged that a senior executive had concealed investment losses. Magellan denied the claims and fully cooperated with the DFSA. The regulator found no evidence of impropriety, bringing the matter to a “clear and final close,” the firm said in a statement.

Magellan, which is planning to launch this year with approximately $700m in seed capital from a wealthy Middle Eastern family, is one of the region’s largest homegrown hedge fund startups. The firm highlighted that the DFSA’s findings reaffirm its governance, transparency, and professional standards.

The case has drawn attention to Dubai’s growing hedge fund sector, now home to more than 70 hedge fund firms, while nearby Abu Dhabi hosts established players including Brevan Howard Asset Management and Marshall Wace.