Investors Convicted of Violating Capital Market Law
In a recent development, ten investors have been found guilty of breaching the Kingdom’s Capital Market Law and have been instructed to pay a hefty total of $27.1 million in fines and compensation for losses, according to a report by the Saudi Press Agency on Thursday.
The Appeal Committee for Resolution of Securities Disputes (ACRSD) handed down the verdict, with one individual even facing imprisonment. The final decision was reached on Dec. 24, 2023.
The $27.1 million penalty includes fines amounting to SR670,000 and compensation of SR101 million for losses incurred due to the violations in their investment portfolios.
The convictions, which also entail trading bans ranging from one to two years, were publicly disclosed by the ACRSD and the Capital Market Authority. The cases were initiated against the 10 investors following a referral from the CMA.
Among the offenses committed, several perpetrators were found to have unlawfully disclosed confidential financial information regarding Abdullah A.M. Al-Khodari & Sons Co. prior to its public release.
They were also guilty of artificially inflating the company’s value to manipulate share prices and attract unsuspecting investors.
The CMA stated on its website and X platform: “One of the convicted individuals was held accountable for issuing a misleading statement in a listed company’s public announcement in the capital market.
“This was done to influence the security’s price or encourage others to purchase it, along with failing to disclose crucial developments within the company.”
Furthermore, others were found to have engaged in trading based on illegally disclosed internal information, aiming to profit from it before it was made public.
The ruling named individuals such as Mish’al bin Abdullah bin Abdulmohsen Alkhudari, Naif bin Abdullah bin Abdulmohsen Alali, Abdulaziz bin Abdullah bin Abdulmohsen Alkhudari, Ghada bint Abdullah bin Abdulmohsen Alkhudari, and Sami bin Abdullah bin Abdulmohsen Alkhudari.
Fawaz bin Abdullah bin Abdulmohsen Alkhudari was specifically directed to pay SR50.5 million to the CMA for his involvement in the violations within his investment portfolio.
Other fines ranged from SR100,000 to SR12 million for the remaining individuals.
The SPA urged investors who suffered losses to come forward and file claims for compensation.