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Saudi regulator issues $319m in fines for share fraud

Saudi share fraud Reuters/Nael Shyoukhi
The CMA fined the 17 people and ordered them to pay back $319 million in share gains
  • 17 people fined between $16,000 and $246,000
  • Group ordered to pay back hundreds of millions in gains
  • They focused on shares in Saudi construction giant Dar Al Arkan

Saudi Arabia’s financial regulator has convicted 17 people of manipulation and fraud for trading shares in the kingdom’s largest property developer.

The group has been hit with fines amounting to hundreds of millions of dollars, when the value of gains they have been ordered to return are included.

 The Saudi Capital Markets Authority (CMA) on Thursday announced that it had reached a final decision against a number of traders. It ruled that they violated the Capital Market Law when trading in shares of Dar Al Arkan Real Estate Development Company.

Their activity was “considered manipulation and fraud, hence created a false and misleading impression regarding the security of the said company”.

It said the group’s total illegal gains amounted to SAR1.196 billion ($319 million).

The 17 people were issued fines ranging from SAR60,000 to SAR925,000. They and their investors were ordered to pay back all their illegal gains.

The CMA said: “Their 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 share, and entering purchase orders and sale orders aiming to affect the closing share price.”

The group was convicted of violating Article 49 of the Capital Market Law. It stipulates it is illegal to take action “which creates a false or misleading impression as to the market, the prices or the value of any security for the purpose of creating that impression or thereby inducing third parties to buy, sell or subscribe for such security.”

Following the investigation, launched in 2020, all convicted were also banned from trading directly or indirectly, and banned from managing portfolios for periods ranging from six months to one year.

Dar Al-Arkan is one of the Middle East’s largest construction and development companies. Its activities include residential, mixed-use, and commercial developments across Saudi Arabia, including in Riyadh, Jeddah, Makkah, and Madinah, as well as overseas in Dubai and elsewhere.

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