Convicting an Investor of Violating the Capital Market Law and its Implementing Regulations and Obligating him to Pay SAR 3.78 Mln

The Appeal Committee for Resolution of Securities Disputes (ACRSD) convicted an investor of violating the Capital Market Law and its implementing regulations, imposed a fine on him of SAR 1.75 million, and obligated him to pay SAR 2.03 million for the illegal gains made on his investment portfolio .

The violating behavior included the entry of purchase orders that aims to influence the share price (some of them are related to sell orders) as well as entering sale orders aiming to affect the share price then purchasing, when trading in the shares of the following companies: (Takween Advanced Industries Co., Saudi Steel Pipe Co., National Gypsum Co., Saudi Advanced Industries Co., National Metal Manufacturing and Casting Co., Najran Cement Co., Al Kathiri Holding Co., Middle East Healthcare Co., Saudi Automotive Services Co., Emaar The Economic City, Red Sea International Co., National Company for Learning and Education, Dar Alarkan Real Estate Development Co., Al Gassim Investment Holding Co., Aljazira Takaful Taawuni Co., Fesh Fash Snack Food Production Co. and Arabian Food and Dairy Factories Co.) during the period form 13/08/2020 to 15/06/2022. These practices constituted manipulation and fraud and created a misleading and incorrect impression regarding the securities of mentioned companies.

According to the ACRSD's final decision, Abdulaziz bin Abdulkhaliq bin Muhamad Almuntashiry was found guilty of violating Paragraph (A) of Article (49) of the Capital Market Law and Paragraph (A) of Article (2) of the Market Conduct Regulations. The violating behavior of the convicted included the entry of purchase orders that aims to influence the share price of the above-mentioned 17 companies (some of them are related to sell orders), as well as entering sale orders aiming to affect the share price then purchasing.

Almuntashiry was also previously suspended twice from the electronic trading service and executing any margin deal for a period of three months (these are deals in which the investor borrows part of the cost of purchasing shares from the licensed person, to give him greater purchasing power), and an explanation of the violating behavior that resulted in those warnings and suspensions, and directly requested to cease those practices and to review the Market Conduct Regulations.

However, Almuntashiry continued committing the same violating behaviors intentionally through the entry of purchase orders that aims to influence the share price of the companies, subject to violation, then carrying out purchase deals. The convicted failed to justify committing the said violations, stating that buy/sell orders in different prices were only made to get a specific amount of shares and there were no sellers in one price scope of such amount of shares and that due to his lack of knowledge that these practices were considered a violation. ACRSD, however, considered the above illogic justifications. As the knowledge and understanding of the laws and regulations are the investor's responsibility. Such responsibility is not waived due to his ignorance of them, especially with his financial benefit from repeating these behaviors and achieving illegal gains amounting to (2,038,095.39). The above required the issuance of a decision with the imposition of a precautionary seizure on the investment and banking accounts and cash balances obtained from the sale of investment portfolio assets. Also, a decision was issued fining the convicted SAR 1,750,000 and banning him from direct or indirect purchase trading on companies listed on the Saudi Exchange for one year, except trading through investment funds in the capital market institutions.

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 it by the CMA, against the violator 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 violator 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

To view the trading history and the security subject to the violation, click here