Fifteen people were convicted and fined for violating the financial market regulations
The Saudi Capital Market Authority (CMA) announced two final rulings from the Securities Disputes Appeal Committee, convicting 15 individuals of violating the Capital Market Law. These convictions resulted in fines exceeding SAR 10.7 million, in addition to requiring the convicted individuals and other investors to pay more than SAR 12 million in illicit gains resulting from these violations. This decisive action is part of the CMA's ongoing efforts to regulate trading and protect investors' rights.
Regulatory context and history of combating violations of the financial market system
The Capital Market Authority (CMA) in the Kingdom of Saudi Arabia was established by Royal Decree in 2003, pursuant to the Capital Market Law, with the aim of regulating and developing the capital market and issuing the necessary regulations and rules to protect investors from unfair or unsound practices. Over the years, the CMA has intensified its strict oversight to curb any manipulation, as violations of the Capital Market Law are considered a red line that threatens the integrity of the national economy. In this context, the recent convictions were based on violations of Article 49 of the Law and Article 2 of the Market Conduct Regulations. The convicted individuals were found to have manipulated and defrauded the market, creating a misleading impression regarding the shares of listed companies between late August 2021 and early July 2022. These violations involved placing buy orders to influence share prices and linking them to sell orders, thus violating the principle of genuine supply and demand.
Details of the penalties imposed on the convicts
The decisions issued included a range of deterrent penalties. In addition to fines totaling 10.7 million riyals, 13 defendants were ordered to pay more than 6.7 million riyals, and other investors were ordered to pay more than 5.5 million riyals as restitution of illicit gains. The decisions also included the conviction of an individual for violating Article 31 of the regulations by practicing management activities without a license. In a decisive move, the committee prohibited the convicted individual, Khalid bin Ibrahim bin Abdullah Al-Juraibi, from trading directly or indirectly in the financial market for five years, and banned him from practicing brokerage, portfolio management, or working as an investment advisor for the same period. The names of other convicted individuals, such as Imran bin Mohammed bin Imran Al-Omran and Mohammed bin Nasser bin Mohammed bin Imran, were also mentioned to ensure complete transparency for the public.
The economic impact of protecting the market and boosting investor confidence
This regulatory measure is of paramount importance both domestically and regionally. Domestically, this decision reinforces the confidence of individual and institutional investors in the soundness and fairness of the Saudi Stock Exchange (Tadawul), the largest in the Middle East and North Africa region. Firmly addressing any manipulation ensures that capital is directed towards genuine investments that support the real economy and align with the objectives of Saudi Vision 2030, which aims to make the Saudi market an attractive and secure environment. Regionally and internationally, these decisions send a clear message to foreign investors that the Kingdom's investment environment is subject to rigorous institutional oversight that applies the highest global standards of transparency and corporate governance, thereby enhancing the Saudi market's ranking in global indices.
The mechanism for claiming compensation for those affected
In its commitment to safeguarding rights, the General Secretariat of the Committees for the Resolution of Securities Disputes announced that any party harmed by these practices has the right to file an individual or class action lawsuit to claim compensation for damages incurred. Those who entered into agreements with individuals convicted of unlicensed activities also have the right to demand the termination of the contract and the return of funds. The Secretariat stipulated that this must be preceded by the submission of a formal complaint through its website. To facilitate the process, the General Secretariat will publicly announce the registration of any class action lawsuit, allowing other affected parties to easily join it, thereby reaffirming its full commitment to restoring rights to their rightful owners and purging the market of any illicit gains.
