10 Capital Market Law violators convicted, fined SAR 101.7M

Logo of Capital Market Authority (CMA)

The Appeal Committee for the Resolution of Securities Disputes (ACRSD) issued a final decision today, June 13, convicting 10 investors of violating the Capital Market Law and sentenced one of them to imprisonment.

The decision also obligated the violators to pay a fine totaling SAR 101.7 million. This amount included SAR 670,000 in fines against the 10 convicted investors and SAR 101 million in avoided losses resulting from the violations committed to their investment portfolios.

ACRSD issued its final decision convicting each of Mishaal Al-Khodari, Naif Alali, Abdulaziz Al-Khodari, Ghada Al-Khodari, Sami Al-Khodari, Fawaz Al-Khodari, Jameel Al-Khodari, Ali Al-Khodari, Fawzi Alali, and Fawzia Alali. The decision entailed sentencing Fawaz Al-Khodari to six-month imprisonment for false disclosure of information related to the board recommendation in 2018 to increase capital of former TASI-listed company, Abdullah A. M. Al-Khodari Sons Co., by a maximum of SAR 257 million, giving a misleading impression on the company’s stock.

The committee also convicted Fawaz Al-Khodari, Jameel Al-Khodari, and Ali Al-Khodari for 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, the ACRSD decision convicted all the above investors for their insider trading based on information disclosed by Fawaz Al-Khodari, Jameel Al-Khodari, and Ali Al-Khodari, to benefit from such information prior to its announcement and public disclosure.

In addition to the fines, ACRSD obligated seven of the convicted persons to pay SAR 50.4 million. It also mandated one of the female investors to pay another SAR 50.5 million to the Capital Market Authority (CMA) against the avoided losses given the violations committed in their investment portfolios as a result of the aforementioned.

The sanctions issued by ACRSD against the 10 convicted persons entailed banning them from dealing with securities trading in the Saudi capital market for various periods ranging from one to six years.

The CMA clarified that the decision is definite. It stemmed from coordination and cooperation with relevant entities. This followed a public criminal lawsuit filed by the Public Prosecution, referred by the CMA against such violators.

The authority continuously monitors and controls violating behaviors, completing necessary actions to impose deterrent penalties. This is part of its effort to foster an attractive and safe investment environment free from unfair or fraudulent practices.

Victims of the mentioned violations can file individual or collective lawsuits against the offenders for compensation through the Dispute Resolution Committee, after filing a complaint with the CMA. The General Secretariat of the Dispute Committees will announce on its website when a collective lawsuit is registered, allowing others affected to join, the market regulator added.

The General Secretariat of the Dispute Committees in Securities Disputes has publicly disclosed the identities of the violators on its website following the confirmation of violations and the issuance of ACRSD’s final decision.