Financial Crime World

Saudi Arabia: CMA ImposesSAR5 million Fine for Insider Trading and Market Violations

In a recent crackdown, the Saudi Capital Market Authority (CMA) fined five investors and one company a total of SAR5 million ($1.3 million) for insider trading and other capital market law violations.

Violators and Penalties

  • Mohammed Al-Fahad, Ahmed Al-Saadi, and Erada and Riyada for Development and Commercial Investment: Bought shares of a Saudi company before an affiliate announced a Covid vaccine distribution agreement. Erada and Riyada was fined SAR3 million, while individual penalties were SAR1.3 million and SAR1.8 million, respectively. They are also required to pay SAR0.8 million covering financial gains made from 2018 to 2021.
  • Khalid Al-Mansour, Fahad Al-Zain, and Abdulaziz Al-Dosari: Attempted to influence share prices and offered advisory services without a license. Penalties ranged from SAR230,000 to SAR2.8 million.

The CMA stated in a press release that violators could be subject to individual or class action claims for compensation. Additionally, they emphasized Saudi Arabia’s commitment to holding wrongdoers accountable and maintaining the integrity of the financial markets.

CMA statement

“This decision marks another important step in the CMA’s continuous efforts to ensure a fair and transparent capital market,” said Mohammed El-Kuwaiz, chairman of the CMA. “We remain steadfast in our mission to protect investors and maintain the integrity of our market, ensuring that all market participants comply with applicable laws and regulations.”

Saudi Arabia’s Anti-Corruption Campaign

As part of the country’s Vision 2030 reforms, Saudi Arabia launched a major anti-graft campaign in 2017. Recent high-profile arrests include the head of the Royal Commission for AlUla on corruption charges. The government also introduced a whistleblower law earlier this year to offer protection for reporting suspected cases.

Regional Crackdown on Insider Trading

This crackdown on insider trading is part of a larger regional trend in the Gulf Cooperation Council countries. In recent years, the UAE and Bahrain have taken similar measures to strengthen their financial markets and protect investors. The efforts are expected to attract more regional and international investors to Saudi Arabia’s debt and derivatives markets, enhancing the kingdom’s economic diversification plans.