Illegal trading: 17 manipulators, 5 investors ordered to pay back SR1.196 bln

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RIYADH โ€” The Capital Market Authority (CMA) announced Thursday the final decision of the Committees for Resolution of Securities Disputes convicting 17 people of violating the Capital Market Law, and the Market Conduct Regulations.

The decision obliged the violators including five investors to pay a total of SR1.196 billion in illegal gains. It also imposed on them a fine exceeding SR6 million.

The CMA indicated that the final decision of the Appeal Committee for Resolution of Securities Disputes (ACRSD) came as a result of coordination and cooperation between the authority, the Public Prosecution, and law-enforcement authorities.

The decision was in a penal lawsuit filed by the Public Prosecution, after the case was referred to it by the CMA, against a number of violators of the Capital Market Law.

The convicted persons traded in the shares of Dar Alarkan Real Estate Development Company during the period between 27/04/2017 and 23/01/2018, as well as the period between 18/02/2018 and 31/05/2018. Their trading activities and practices were deemed to be manipulation and fraud that created a false and misleading impression regarding the security of the company. The violations are represented in their acts, through their portfolios, or the portfolios they manage, of entering purchase orders and sale orders aiming to affect the price of the shares.

The CMA clarified that the decision of the ACRSD obligated the 17 convicted violators to pay to the CMA’s account a total amount exceeding SR796 million, accounting for the illegal gains achieved in their portfolios. It fined them SR6 million for committing violations through their portfolios and for exploiting their management of portfolios belonging to five other investors to commit the same violations.

The decision also included obliging the five investors to pay a total amount exceeding SR399 million for the illegal gains earned in their portfolios.

In addition to the fines, the decision also included imposing other sanctions upon the convicted violators, such as banning them from trading, directly or indirectly, and banning them from managing portfolios for periods ranging from six months to one year.

The CMA stressed the importance of what the investors’ confidence in the capital market represents for its growth and prosperity. The CMA continuously monitors any behavior that violates the Capital Market Law, its Implementing Regulations, and the rules that the CMA is competent to enforce. It has the perpetrators of such violations arrested, and it completes necessary procedures to impose deterrent sanctions against them to enhance the CMA’s efforts aimed at creating an investment environment that is attractive to all categories of investors and secure from unfair or improper practices or that involve fraud, manipulation, misrepresentation, or misleading. Additionally, the CMA warns all who deal in the capital market that illegal practices that form fraud, manipulation, misrepresentation, and misleading are considered criminal offenses. Perpetrators of such practices are subjected to legal accountability and the imposition of sanctions stipulated in the Capital Market Law.

The CMA also stressed that it will not hesitate to pursue capital market manipulators by monitoring their transactions based on its powers in accordance with the Capital Market Law, using advanced technical means that enable it to monitor all transactions and monitor suspected cases, and take necessary legal measures in accordance with the rules and regulations, in addition to coordinating with the law enforcement authorities, each according to its jurisdictions, to track anyone who attempts to practice manipulation or deception in the capital market. These efforts come together in order to achieve the CMA objectives toward enhancing the efficiency of the capital market, protecting traders who deal in it, and ensuring that they are not deceived or manipulated.

Furthermore, any person affected by these violations in this lawsuit is entitled to file a compensation claim (as individual or class action) against violators with the Committee for Resolution of Securities Disputes (CRSD) for the damage he/she suffered due to these violations, provided that such claim is preceded by a complaint filed with the CMA in this regard. โ€” SPA

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