6 investors, 2 firms fined SAR 14.5M for Capital Market Law violations

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The Capital Market Authority (CMA) announced three final decisions issued by the Appeal Committee for Resolution of Securities Disputes (ACRSD) against six investors and two investment firms for violating the Capital Market Law, the Market Conduct Regulations, and the Securities Business Regulations while total fines amounted to around SAR 14.5 million.

In the first ruling, Majed Alghamdi, Diyar Altamlik Real Estate Co., and Abdulrahman Alghamdi were convicted of violating Article (31) of the Capital Market Law and Articles (5) and (17) of the Securities Business Regulations. They engaged in securities business through managing real estate funds between Feb. 27 and Nov. 16, 2023, without a CMA license, and promoted their activity via Snapchat, Instagram, and the website (diyartaltamlik.com). Each was fined SAR 100,000 in total for these violations.

The second ruling convicted Middle East Financial Investment Co. (MEFIC Capital), Ibrahim Alhudaithi, and Turki Alfawzan of violating Article (49) of the Capital Market Law and Article (7) of the Market Conduct Regulations.

They failed to disclose a material change in the financial position of the MEFIC REIT Fund at its listing on Nov. 13, 2018, showing a 27.81% drop in the fund’s book value compared to the value in its March 26, 2018 Terms and Conditions Memorandum. Each was fined SAR 81,250, while Alhudaithi and Alfawzan were banned for two years from brokerage, portfolio management, or advisory activities.

In the third ruling, Mohsen Alotaibi and Abdulrahman Alabdulkarim were convicted of violating Article (49.a) of the Capital Market Law and Article (7) of the Market Conduct Regulations. They provided false information in the share registration document of Rawasi Albina Investment Co. to meet listing requirements in the Nomu Parallel-Market, falsely claiming 40.14% public ownership when the actual figure was 6.77%.

Alotaibi was fined SAR 6 million, Alabdulkarim SAR 8 million, and both were banned for three years from working in CMA-supervised entities.

The CMA said the ACRSD’s final decisions followed coordination with relevant authorities and resulted from criminal cases filed by the Public Prosecution and referred by the CMA.

The CMA stressed that investor confidence is vital for the market’s growth and continues to monitor violations, identify offenders, and impose deterrent penalties to ensure a fair, transparent, and fraud-free investment environment.

The General Secretariat of the Committee for Resolution of Securities Disputes (GS-CRSD) stated that individuals who entered into agreements with those convicted in the first ruling may file individual or class actions with the CRSD to annul contracts and recover funds under Article (60/b) of the Capital Market Law. Those harmed by violations in the second or third rulings may also file for compensation, after submitting a complaint to the CMA through the File Complaint portal.

The CMA stated that the GS-CRSD has published the violators’ identities on its website after the final ACRSD decisions, accessible via the following links:

- GS-CRSD Announcement (First Final Decision) – Click here

- GS-CRSD Announcement (Second Final Decision) – Click here

- GS-CRSD Announcement (Third Final Decision) – Click here