CRSD issues ruling in MMG’s lawsuit

Logo of Mohammad Al Mojil Group (MMG)

The Second Circuit of the Committee for Resolution of Securities Disputes (CRSD) issued on Dec. 10, 2023, its resolution No. (4857/L/D2/2023) of the year 1445 H regarding the lawsuit filed by shareholder Mortada Al Rasasi against some former board members and employees of Mohammad Al Mojil Group (MMG).

The ruling came in absentia against the first and third defendants, and in presence against the remaining defendants, as follows:

First: Compensating Mortada Al Rasasi with SAR 378 on the illegal gains collected by Mohammad Al-Mojil.

Second: Obligating the first defendant, Adel Al-Mojil, and the third defendant, Abdullah Al Hariki, to jointly bear the amounts exceeding those obtained from illegal gains collected by Mohammad Al-Mojil.

Third: The plaintiff’s case was not heard against the second, fourth, fifth, sixth, seventh and eighth defendants, for the statute of limitations.

Fourth: Rejection of other claims.

CRSD indicated, in a statement, that it was not possible to infer the addresses of the first and third defendants. Accordingly, it decided to inform them of the ruling issued against them by publishing it on the website of the General Secretariat of the Committees for Resolution of Securities Disputes (GS-CRSD).

The defendants have the right to appeal to the ruling within thirty days from the publication date. The decision takes effect in case of lack of objection within this period, it noted.

The Capital Market Authority (CMA) earlier stated that CRSD accepted the class action filed by an investor against some former board members and employees of MMG, according to data compiled by Argaam.

The investor claimed compensation for the damage he suffered due to the announcements made by the company on Feb. 22, 2012, and April 21, 2012, which created a misleading and false impression about MMG’s financial position.

Last August, GS-CRSD announced the issuance of CRSD’s decision, dated Aug. 14, 2023, approving the acceptance of the request to register the class action lawsuit filed by the abovementioned investor.

The request includes the claim for compensation for the damage he incurred as a result of previous announcements issued by the company in 2012. This included the publication of the company's annual financial statements for 2011 and Q1 2012, which were later proven to be invalid, based on the company's announcement on Sept. 22, 2012, regarding its financial results for Q2 2012.

The abovementioned investor, driven by this alleged error, was lured to trade in MMG shares during the period from Feb. 22, 2012, until July 21, 2012. This is given what was falsely stated in the company's financial statements during this period, which created an incorrect and misleading impression about the firm's financial position during that period.