Capital market system’s amendments entail fines up to SAR 25 mln

Under the amendments of the capital market system, which were recently approved by the Saudi cabinet, the disputes committee can penalize violators with fines up to SAR 25 million.

Article 59 indicates the following:

A) The Capital Market Authority (CMA) has the right to file a lawsuit against any person who commits, participates or attempts acts or practices that constitute a violation of any of the provisions of the Capital Market Law, or the regulations of the CMA, the Depository Center (Edaa), or central counterparty (CCP) for securities clearing. The penalties include the following:

1) Issue a warning.

2) Require the violator to refrain from the disputed acts.

3) Require the violator to take necessary steps to avoid the violation, or take the necessary corrective measures.

4) Oblige the violator to pay no more than three times the gains resulting from the violation, or pay three times the value of the losses avoided as a result of the violation, or compensate those harmed by his acts.

5) Suspension from trading.

6) Banning the violator from brokerage, portfolio management, or working as an investment advisor for a period of time enough to ensure the market and investors safety.

7) Seizure and attachment proceedings.

8) Travel ban.

9) Banning the violator from working with entities under CMA supervision.

B) CMA may also request from the committee to impose a fine on deliberate violators worth up to SAR 25 million per violation.

C) CMA may, instead of articles A and B, take any or all of the following measures:

1) Issue a warning.

2) Require the violator to take the necessary steps to avoid the violation, or take the necessary corrective measures.

3) Impose a fine on any person responsible for the violation worth up to SAR 5 million.

D) Subject to the provisions of subparagraph (4) of article (A), CMA may regulate the procedures for compensating the persons who have been harmed as a result of the violation, and may, for this purpose, establish compensation funds, sources from the collected unlawful gains. The compensation shall be in accordance with a distribution plan set by the authority in order to curb any resulting financial or legal risks.