Major Crackdown on Insider Trading: Saudi Arabian Authorities Impose $158 Million Penalty

Saudi Arabia’s Largest Ever Penalty for Securities Scandal

DUBAI - In a significant move against insider trading, Saudi Arabian authorities announced penalties totaling around $158 million for illicit dealings in the shares of Etihad Etisalat (Mobily) <7020.SE>, the country’s second-largest telecommunications operator.

Historical Penalty for Securities Scandal in the Kingdom

The Securities and Exchange Commission (SE Commission) announced the penalty on Monday, citing it as one of the largest ever handed down for a securities scandal in the kingdom. {“The penalty is a significant warning to those considering insider trading,” a SE Commission spokesperson said. “Saudi Arabia has been at the forefront of tackling illicit equities trading in the region over the past decade."

Abdulaziz Alsaghyir Business Investment Co Fined for Insider Trading

The Appeal Committee for the Resolution of Securities Disputes ordered Abdulaziz Alsaghyir Business Investment Co to pay the Capital Market Authority (CMA) 562 million riyals ($151.8 million) for insider trading in Mobily shares. The fine covers losses the company had avoided through illegal trading, according to a CMA statement.

• Abdulaziz Alsaghyir Business Investment Co: Penalty: 562 million riyals ($151.8 million)

Individuals Faced Fine for Insider Trading and Disclosure

Four individuals, including former Mobily chairman Abdulaziz Al Saghyir, were fined between 1 million and 2 million riyals each for disclosing or trading on insider information. Al Saghyir was ordered to pay an additional 30.5 million riyals.

• Abdulaziz Al Saghyir: Penalty: 1 million riyals for disclosing insider information + 30.5 million riyals for insider trading

Legal Action Following Mobily’s Accounting Scandal

Legal action was initiated against the defendants following Mobily’s accounting scandal, which was revealed at the end of 2014. The company restated earnings for the previous 27 months, citing accounting errors related to the premature booking of revenue from wholesale broadband leases and mobile promotional campaigns. The scandal caused Mobily’s shares to plummet when it was first reported.

• Impact of Accounting Scandal: approximately 1.76 billion riyals ($482.2 million) cut off Mobily’s profits

Timeline of Events

• End of 2014: Mobility’s accounting scandal revealed
• Early 2015: Abdulaziz Al Saghyir resigned as chairman, citing health reasons
• Mid-2015: Insider trading case against Abdulaziz Al Saghyir and others was filed
• 2021: Penalties for insider trading announced.