CMA: Obligating the CEO and Some Employees of Abdullah A. M. Al-Khodari Sons Company to Pay Approximately SAR 85 Million in Compensation in the Two Class Actions Filed Against Them

Further to the CMA’s announcement published on its website on 28/03/2025 regarding the issuance of two decisions by the Committee for Resolution of Securities Disputes (CRSD) approving the two class actions filed by an investor (the main Claimant) against the CEO and some employees of Abdullah A. M. Al-Khodari Sons Company (the “Company”), namely: Fawaz bin Abdullah bin Abdulmohsen Alkhodari, Sohail Sa’eed Mohammed Sa’eed, and Kailash Nath Sadangi following the issuance of final decisions convicting them of violating the Capital Market Law and its Implementing Regulations, the CMA announces the issuance of two decisions by the Appeal Committee for Resolution of Securities Disputes (ACRSD) obligating the respondents to pay approximately SAR 85 million to the affected investors who joined the two class actions approved on the above-mentioned date, in accordance with each claimant’s entitlement as determined by the CRSD and upheld by the ACRSD.
The ACRSD had previously convicted the violators in two separate decisions for inflating the revenues in the Company's financial statements during the financial period extending from the fiscal year ending on 31/12/2010 to the fiscal year ending on 31/12/2017, which were announced during the period from 16/02/2011 to 31/03/2018, showing the annual financial statements of the fiscal period under violation being untrue, hence creating a false and misleading impression regarding the value of the Company's security, which were proven later on that such financial statements are false based on the announcement of the Company prior to market opening on 13/02/2019, indicating that the Company endured accumulated losses which reached (198.52%) of its capital.
The ACRSD also announced in its final decisions at the time the CEO’s responsibility for the Company's announcement published on the website of the Saudi Exchange (Tadawul) on 05/06/2018 that included a false statement regarding a substantial event (Amending the Recommendation of the Company's Board of Directors for the Extraordinary General Assembly to Increase its Capital by Granting New Shares against the Liabilities of the Company), and dismissing the disclosure of cancelling the award of (10) projects and withdrawing them from the Company during the period of 30/05/2017 to 31/01/2020, in an attempt to affect the security's price or urge others to purchase the security.
The CMA affirms that investor confidence represents a fundamental pillar for the growth and development of the capital market. The CMA has been keen to activate various tools that facilitate litigation mechanisms and enhance their effectiveness, including the regulation of class actions in disputes involving a large number of investors with unified legal positions and similar facts and legal issues under consideration. This approach is aligned with the nature of the capital market and its broad investor base, contributes to reducing the time required to adjudicate investor compensation cases, enhances the efficiency of the relevant committees, and at the same time, strengthens the unification and focus of investors’ efforts within a more effective and organized procedural framework.
Details of the announcement can be found as published on the official website of GS-CRSD through the following link:
Announcement of the GS-CRSD – click here