Saudi CMA Levies Fines

The Saudi CMA announced regulatory actions against five individuals.

You may have seen headlines about "fines" of US$1.1 million equivalent.  I believe that the what has happened is that press reports are including return of illegal profits as part of the total.  My reading (or more precisely translation) is that the fines were only  SAR 600,000 (US$160,000) and the remaining amount SAR 3,133,824 (US$835,686) represents return of illegal profits.  The Arabic text is not crystal clear (and is, as well, perhaps my own mind) but it seems unlikely that the CMA would levy odd amounts as fines.

First, Turky Bin Satam Bin 'Abika AlNasiri

1. Accused of irregular transaction in the shares of 17 companies (!) between 11 Feb 08 and 27 Sept 08
2. Return of profits of SAR 2,693,114
3. Fine of SAR 450,000
4. Banned from working in Saudi securities industry for one year
5. Banned from any trading in securities in Saudi for one year

Second, Mu'id Bin Ridad Bin Said AlZahrani and Ridad Bin Said Bin Ridad AlZahrani

1. Accused of irregular transactions in shares of National Company for Co-Operative Insurance
2. Fined SAR100.000
3. Both banned from working in Saudi securities industry or any trading for one year

Third, Abdulrahman Bin Salih Bin Ibrahim AlHadif

1. Accused of irregular transactions in shares of Fibco (1 Sept 2007 through 12 Sept 2007)  and Saudi Group  (4 Dec 2007 through 15 Dec 2007)
2. Return of profits of SAR 200,171
3. Fine of 50,000
4. Banned from both working in Saudi securities industry and any trading for one year

Fourth, Amal Bint Abdulrahman Al Man'i

1. Return of profits of SAR 240,539 - Mr. AlHadif was her agent
2. The CMA announcement of the judgment against her is included in Mr. AlHadif's announcement above

Recently the Saudi CMA has been "cracking down" on market manipulation and other violations of its rules to "enforce its rules and to protect market participants from illegal practices" (as each of the above announcements ends).  You'll recall that earlier this week it revoked the license of two securities firms for failure to abide by its regulations.   Here's a link to an article from Maktoob business with a bit of background on this issue.

Tip:  Foreign financial firms offering securities or securities related services  in the Kingdom would be well advised to read carefully the CMA's regulations on these activities.   The CMA regulations apply not only to securities issued by Saudi entities but also securities issued by foreign entities.  The regulations also govern both the requirements for offerings (definition of types of offerings, their required content and regulatory approvals) as well as authorized persons (types of licenses and registration/approval requirements).   Note the authorized person regulations outline the registration/approval requirements to undertake a variety of roles - principal, agent, underwriter, manager, custodian, advisor, etc.  The regulations also stipulate when a local office is mandatory.

The Arabic text is the governing text. NOT the English translation.  Even the one on the CMA website.   A couple of years ago the "official" English translation of the regulation on offerings had an error in the section on exempt offerings.  It still may.

The Saudi Stock Market (Tadawwal) dwarfs all other GCC markets in terms of value.  If I'm not mistaken, the Tadawwal has a larger market cap than all the other GCC bourses together.  The next largest market is that in Kuwait.