Convicting 5 Investors for Violating the Capital Market Law and its Implementing Regulations and Obligating them to Pay SAR 44.9 Million

The Appeal Committee for Resolution of Securities Disputes (ACRSD) convicted five investors of violating the Capital Market Law and its implementing regulations, imposed fines of SAR 3.5 million on them and obligated four of these investors and a local company to pay SAR 41.4 million due to the illegal gains achieved in their investment portfolios, including the portfolio of a company owned by one of the violators.
The violations included manipulation and misleading activities, where four investors executed a series of transactions both before and after the listing of Watani Iron Steel Co. As a result, their percentage of ownership in the Company's shares increased without the required disclosure to shareholders and the public. The fifth investor used WhatsApp to promote opinions in two chat groups, aiming to influence the company's share price. Subsequently, he sold his shares and profited from the price increase resulting from his promotional activities.
According to the CMA, ACRSD issued its final decision convicting each of Abdulkarim bin Muhamad bin Abdulaziz Alrajhi, Shaden bint Abdulkarim bin Muhamad Alrajhi, Shahad bint Abdulkarim bin Muhamad Alrajhi and Mesha'el bint Abdulkarim bin Muhamad Alrajhi as they were found guilty of violating Article (49/a) of the Capital Market Law and Article (7) of the Market Conduct Regulations. The violating behavior of the convicts included performing a series of transactions before and after the listing of Watani Iron Steel Co. up to 09/05/2021, which increased their ownership percentage in the Company's shares without disclosing this information to shareholders and the public. Abdulkarim bin Muhamad bin Abdulaziz Alrajhi failed to declare such practices and presented incorrect information in the company's shareholder record. Such acts and practices created a false and misleading impression in the document of the Company Shares Registration published in the CMA website on 17/01/2021.
As for Riyadh bin Sulaiman bin Omar Alkhorashi, he was convicted for violating Article (49/a) of the Capital Market Law and Article (8/a) of the Market Conduct Regulations for promoting opinions in two social media groups via WhatsApp, named “Offerings Group - Shares", aiming to influence Watani Iron Steel Co.'s share price. In addition, executing four special transactions with Shaden bint Abdulkarim bin Muhamad Alrajhi, Shahad bint Abdulkarim bin Muhamad Alrajhi and Mesha'el bint Abdulkarim bin Muhamad Alrajhi to purchase shares in the Company after its direct listing on the Nomu Exchange, using both his personal portfolio and that of a company he owns. He then sold his shares and benefited from the price increase resulting from his promotional activities between 15/02/2021 and 28/03/2021. Simultaneously, a precautionary seizure of all movable and immovable properties of the convicted individuals was ordered, including bank and investment accounts, until the awarded sums are collected.
The CMA explained that the final decision of the ACRSD came as a result of joint coordination and cooperation between the CMA and relevant concerned authorities, and in light of the public penal lawsuit filed by the Public Prosecution, referred to by the CMA, against a number of violators of the Capital Market Law and its implementing regulations.
 The CMA stresses the importance of investors' confidence in the capital market for its growth and prosperity. The CMA continuously monitors any violations of the Capital Market Law, its implementing regulations, and the regulations that the CMA is responsible for implementing, identifies the perpetrators, and process the necessary procedures to impose deterrent penalties against them, in order to enhance the CMA's efforts aimed at creating an attractive investment environment to all categories of investors and safe from unfair or unsound practices or that involve fraud, cheating, deception or manipulation. The CMA also calls on all traders in the exchange that illegal practices that involve fraud, cheating, deception and manipulation are crime offenses, and exposes their perpetrators to legal accountability and the imposition of sanctions stipulated in the Capital Market Law.
The CMA also stresses that it will not hesitate to pursue manipulators in the capital market by monitoring their transactions based on its powers in accordance with the Capital Market Law, and using the advanced technical means it possesses that enable it to monitor all transactions, detect suspicious cases, and take the necessary legal measures in accordance with the rules and regulations. In addition to that, the CMA coordinates with the relevant concerned authorities, each according to their jurisdiction, to track down anyone who attempts to commit fraud or manipulation in the capital market. This comes in fulfillment of the CMA's objectives towards enhancing the efficiency of the capital market, protecting its dealers, and ensuring that they are not exposed to deception or manipulation.
Furthermore, any person affected by these violations in this case is entitled to file a compensation claim (as individual or class action) with the Committee for Resolution of Securities Disputes (CRSD) for the damage he/she suffered from due to these violations, provided that such claim is preceded by a complaint filed with the CMA on this regard, via the following link: (File Complaint). It is worth noting that the General Secretariat of CRSD will announce to the public on its website in case of registering any class action in order to enable the rest of investors affected by such violations to apply to the CRSD to join the class action.
The CMA indicated that the GS-CRSD announced to the public on its website the identity of the violators after the violations and penalties were proven and the final decision was issued by the ACRSD against everyone who violated the capital market laws and implementing regulations. It can be viewed through the following link:
Announcement of GS-CRSD, click here