Convicting 5 Investor and a local company of Violating the Capital Market Law and its Implementing Regulations in Various Cases and Obligating them to Pay SAR 4.8 Million

The Appeal Committee for Resolution of Securities Disputes (ACRSD) convicted five investors and a local company for violating the Capital Market Law (CML) and its Implementing Regulations, imposing fines on them amounting to SAR 4.02 million, and obligating them to pay SAR 811.5 thousand for the illegal gains achieved on their investment portfolios in three separate final decisions.
According to the Capital Market Authority, the ACRSD issued its first final decision convicting Mansour Farraj Mansour Abothnain of violating Article (50/b) of the Capital Market Law, for insider trading during the period from 30/05/2021 until 01/06/2021 when purchasing the shares of Astra Industrial Group prior to the Group announcing on 13/06/2021 (before starting the trading time) via the Saudi Exchange website that one of its affiliated companies (Tabuk Pharmaceuticals Company) signed an exclusive service agreement with Moderna Switzerland GMPH Company to distribute its (COVID-19) vaccine and any other vaccine for the mutated (COVID-19) strains within the Kingdom. He was fined SAR 300 thousand and was obligated to pay SAR 163 thousand for illegal gains achieved in his investment portfolio.
In the second ACRSD final decision, Abdullah bin Sa’id bin Muhammad Alkhazmary Alzahrani was convicted of violating Article (49/a) of the Capital Market Law and Article (2/a) of the Market Conduct Regulations, for entering purchase orders aiming to influence the share price, also for entering purchase orders aiming to achieve a high price of closing bid, some of which linked with sale orders, while trading on the shares of the following companies: Takween Advanced Industries Co., Middle East Paper Co., Basic Chemical Industries Co., Astra Industrial Group, Al Hassan Ghazi Ibrahim Shaker Co., Bawan Co., Electrical Industries Co., Al Yamamah Steel Industries Co., National Gypsum Co., Saudi Industrial Development Co., AYYAN Investment Co., Saudi Arabian Amiantit Co., National Metal Manufacturing and Casting Co., Zamil Industrial Investment Co., Tanmiah Food Co., Al-Babtain Power and Telecommunication Co., Al Abdullatif Industrial Investment Co., Hail Cement Co., Saudi Real Estate Co., Sinad Holding Co., and Red Sea International Co., during the period from 24/06/2018 until 11/10/2021. Such acts and practices represented manipulation and fraud, and created a false and misleading impressions regarding the securities of the abovementioned companies. He was fined SAR 2.8 million and was obligated to pay SAR 647 thousand for illegal gains achieved in his investment portfolio.
In the third final decision, the ACRSD convicted Erada and Riyada for Development and Commercial Investment Company, Abdulaziz bin Abdullah bin Abdulaziz Abanmi, Salman bin Sa’ad bin Muhammad Almalki and Musa bin Abdullah bin Bard Alrowaili for violating Article (31) of the Capital Market Law and Article (5) of the Securities Business Regulations. Erada and Riyada for Development and Commercial Investment Company practiced securities business represented in (Arrainging, Managing, advising), and the three convicts participated in practicing the same acts mentioned above through concluding contract titled “Provision of Financial and Administrative Advisory Services Contract” with an investor during the period from 21/10/2019 until 21/10/2020 without obtaining a license from the CMA. They were fined SAR 900 thousand.
The CMA explained that the final decisions 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 the company and the five investors for violating the Capital Market Law and its implementing regulations. 
The CMA stresses the importance of investors' confidence in the capital market for its growth and development. The CMA continuously monitors any violations, 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, deception or manipulation.
The Capital Market Authority stated that those harmed by the violations addressed in the first and second decisions are entitled to file a compensation claim (as individual or class action) with the Committee for Resolution of Securities Disputes (CRSD) for the damage they suffered from these violations. Additionally, the GS-CRSD announced that those who entered into agreements or contracts with the convicted parties in the third decision have the right to file individual or collective lawsuits with the committee to annul the agreement or contract and recover any money or other property paid or transferred under the agreement or contract, as stipulated in paragraph (b) of Article 60 of the Capital Market Law. 
The filing of individual or collective lawsuits in the three decisions, must be 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 in the three decisions after the violations and penalties were proven and the final decision was issued by the ACRSD. Which can be viewed through the following links:
- Announcement of the GS-CRSD (First Decision) Click here
- Announcement of the GS-CRSD (Second Decision) Click here
- Announcement of the GS-CRSD (Third Decision) Click here