Convicting 10 Investors for Violating the Capital Market Law and its Implementing Regulations and Obligating them and an Investor to Pay SAR 101.7 Mln, Along with the Imprisonment of One of the Investors
The Appeal Committee for Resolution of Securities Disputes (ACRSD) convicted ten investors of violating the Capital Market Law (CML), sentenced one of them to imprisonment and obligating, them and another female investor, to pay SAR 101.7 million. This total includes SAR 670 thousand in fines for the ten convicted persons and SAR 101 million for the avoided losses resulting from the violations committed in their investment portfolios.
According to the Capital Market Authority (CMA), ACRSD issued its final decision convicting each of 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, Sami bin Abdullah bin Abdulmohsen Alkhudari, Fawaz bin Abdullah bin Abdulmohsen Alkhudari, Jameel bin Abdullah bin Abdulmohsen Alkhudari, Ali bin Abdullah bin Abdulmohsen Alkhudari, Fawzi bin Abdullah bin Abdulmohsen Alali, and Fawzia bint Abdullah bin Abdulmohsen Alali. The said decision was taken as a result of convicting Fawaz bin Abdullah bin Abdulmohsen Alkhudari by proving his responsibility for making an incorrect statement in the announcement about Abdullah A. M. Al-Khodari Sons Co. which is a company listed in the Saudi Exchange on 05/06/2018, that included the amendment of the board of directors recommendation for the extraordinary general assembly to increase the Company's capital to the maximum of (SR. 257,000,000) instead of (SR. 208,000,000), as the new shares were granted in return for the settlement of due debts for Abdullah A. M. Al-Khodari Sons for Investment Holding Company, and that the endeavor of Abdullah A. M. Al-Khodari Sons for Investment Holding Company (Major shareholder) to increase its ownership percentage in Abdullah A. M. Al-Khodari Sons Co. (listed in the Exchange) is considered a strong and positive indicator of its desire to provide more types of strategic support to the Company, currently and in the future, hence aiming to affect the price of the security or aiming to urge others to purchase the security of Abdullah A. M. Al-Khodari Sons Co., hence giving a positive impression and affecting the share price of the listed Abdullah A. M. Al-Khodari Sons Co., thus causing it to increase in the following two days of the announcement. Afterwards, the convicted individual, through the portfolio of the Abdullah A. M. Al-Khodari Sons for Investment Holding Company, sold a total number of (2,178,173) Abdullah A. M. Al-Khodari Sons Co. shares owned by Abdullah A. M. Al-Khodari Sons for Investment Holding Company on 06/06/2018 and 07/06/2018, which is not in coherent with the announced goal of the Holding Company to support the Listed Company. In addition to that, it is proven that he is responsible for neglecting to disclose on essential development represented in withdrawing a number of Abdullah A. M. Al-Khodari Sons Co. projects, during the period from 30/05/2017 until 13/01/2020. The decision included sentencing the abovementioned convicted person to imprisonment for a period of six months.
ACRSD also convicted Fawaz bin Abdullah bin Abdulmohsen Alkhudari, Jameel bin Abdullah bin Abdulmohsen Alkhudari and Ali bin Abdullah bin Abdulmohsen Alkhudari of collaborating in the disclosure of internal information relating to the financial position of “Abdullah A. M. Al-Khodari Sons Co." and the possibility of its bankruptcy.
Further, ACRSD decision convicted each of 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, Sami bin Abdullah bin Abdulmohsen Alkhudari, Fawaz bin Abdullah bin Abdulmohsen Alkhudari, Fawzi bin Abdullah bin Abdulmohsen Alali, and Fawzia bint Abdullah bin Abdulmohsen Alali for insider trading based on information disclosed by Fawaz bin Abdullah bin Abdulmohsen Alkhudari, Jameel bin Abdullah bin Abdulmohsen Alkhudari and Ali bin Abdullah bin Abdulmohsen Alkhudari, to benefit from such information prior to its announcement and being available to the public, as they exited the share of Abdullah A. M. Al-Khodari Sons Co. and sold the majority of owned shares during the period between 21/08/2017 and 07/02/2019 after both meetings of board of directors held on 27/07/2017 and 09/08/2017, when both meeting discussed the financial position and the possibility of the Company's bankruptcy, and prior to the Company's announcement of reaching the loss of (198.52%) on 13/02/2019.
In addition to the fines, ACRSD obligated seven of the convicted persons to pay SAR 50.4 million. At the same time, ACRSD obligated a female investor to pay another SAR 50.5 million to the CMA account against the avoided losses as a result of the violations committed in their investment portfolios (Avoided losses refer to losses avoided by the violator through practices that violate the Capital Market Law or any of its implementing regulations, such as providing misleading information, making false statements, or other unlawful practices aimed at avoiding actual or potential losses, influencing the security's price, or encouraging others to purchase it).
The sanctions issued by ACRSD against the ten convicted persons included banning them from working in companies in which their shares are traded in the Saudi exchange for various periods ranging from one to six years.
The CMA explained that the final decision of 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 it by the CMA, against the investors for violating the Capital Market Law.
The CMA stresses the importance of investors' confidence in the capital market for its growth and prosperity. The CMA continuously monitors any violating behaviors, identifies the perpetrators, and processes the necessary procedures to impose deterrent penalties against them, in order to enhance the CMA's efforts aimed at creating an attractive investment environment for all categories of investors and safe from unfair or unsound practices or that involve fraud, cheating, misleading, 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) against the convicted persons 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). However, the General Secretariat of the Committee for Resolution of Securities Disputes (GS-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 sanctions were proven and the final decision was issued by ACRSD. It can be viewed through the following link:
Announcement of GS-CRSD, click here
Web Content Viewer
