المملكة: Urgent – 6 investors and two companies were fined 14 million riyals for violating the financial market system

Issued The Capital Market Authority3 final decisions from the Appeals Committee in securities disputes against six investors and two investment companies, for violating the Financial Market Law, the Market Conduct Regulations, and the Securities Business Regulations, and fining those convicted about (14.5) million riyals for those violations.

According to the first final decision, the Appeals Committee convicted Majid bin Rafi bin Ibrahim Al Ghamdi, Diyar Al Tamleek Real Estate Company, and Abdul Rahman bin Rafi. Bin Ibrahim Al-Ghamdi.

The decision concluded with the conviction of those mentioned for violating Article (31) of the Financial Market Law, and Articles Five and (17) of the Securities Business Regulations. This is due to their practice of a securities business represented by the activity of (management) by establishing and operating real estate funds from the date of 02/27/2023 AD until the date of 11/16/2023 AD, and announcing this via the ID (diyar_altamlik) on the social networking sites (Snapchat) and (Instagram), and via the company’s website under the address (diyartaltamlik.com), in exchange for obtaining a percentage of the invested amounts, without obtaining Obtaining a license from the Capital Market Authority.

Fining violators

Each of them will be fined (50) thousand riyals for violating Article (31) of The Financial Market Law and Article Five of the Securities Business Regulations, and another (50) thousand riyals from each of them for violating Article (17) of the Securities Business Regulations.

While the second decision of the Appeals Committee condemned: the Middle East Financial Investment Company, Ibrahim bin Abdullah bin Rashid Al-Hadithi, and Turki bin Abdullah bin Abdul Rahman Al-Fawzan, for violating Article (49) of the Financial Market Law, and Article Seven. From the list of market conduct, due to the Middle East Financial Investment Company, in conjunction with Ibrahim bin Abdullah bin Rashid Al-Hadithi and Turki bin Abdullah bin Abdulrahman Al-Fawzan, omitting to announce the fundamental development related to the financial position of (MEFIC REIT Fund), represented by a change in the financial position of the fund when it was listed on 11/13/2018 AD, from the financial position disclosed in the memorandum of terms and conditions dated 03/26/2018 AD. It is available to the public during the initial offering period of the fund, which extends from 04/04/2018 until 05/15/2018, and is required to be declared in accordance with the instructions for real estate investment traded funds issued by the Capital Market Authority.

This change is represented by a decrease in the book value of the fund when it is listed from the assumed value mentioned in the terms and conditions memorandum by a rate of (27.81%), as a financial fine was imposed on the three convicts. An amount of (81,250) riyals for each of them, in addition to preventing Ibrahim bin Abdullah bin Rashid Al-Hadithi and Turki bin Abdullah bin Abdulrahman Al-Fawzan from practicing brokerage or portfolio management, or for either of them to work as an investment advisor for a period of two years.

As for the third final decision, the Appeals Committee for Securities Disputes convicted Mohsen bin Miteb bin Mutlaq Al-Otaibi and Abdul-Rahman bin Abdullah bin Abdul-Rahman. Al-Abdulkarim, in violation of Paragraph (A) of Article (49) of the Financial Market Law, and Article Seven of the Market Conduct Regulations; Because they participated in the incident of declaring an incorrect statement in the registration document for the shares of the company (Rawasy Al-Binaa Investment) ("Company"), for the purpose of circumventing the liquidity requirements for listing in the parallel market, by declaring in the company’s stock registration document that the percentage of public ownership amounted to (40.14%) of its total shares, while the actual public ownership did not exceed (6.77%) of the company’s total shares, which led to the company being listed in the parallel market with (93.23%) of its shares remaining in the ownership of persons excluded from the public.

The company’s stock registration document included the ownership of a number of shareholders. fictitiously in order to increase the percentage allocated to the public so that the company becomes eligible for listing, which created a misleading and incorrect impression in the company’s stock registration document. The decision also included the imposition of a financial fine on Mohsen bin Miteb bin Mutlaq Al-Otaibi amounting to six million riyals, while Abdulrahman bin Abdullah bin Abdulrahman Al-Abdulkarim was fined eight million riyals, and they were banned from working in entities subject to the supervision of the Capital Market Authority for a period of three years.

The Authority clarified that the decisions of the Appeals Committee in Conclusive securities disputes came as a result of joint coordination and cooperation between the Authority and the relevant concerned authorities, and in light of the general criminal lawsuits filed by the Public Prosecution and referred to it by the Capital Market Authority against investors for violating the Capital Market Law.

Monitoring Violations

The Authority stresses the importance of what the trust represents Investorsin the financial market for its growth and development, as the Authority works continuously to monitor any violating behavior, arrest its perpetrators, and complete the necessary procedures to impose deterrent penalties against them, in order to enhance the Authority’s efforts aimed at creating an investment environment that is attractive to all categories of investors and safe from unfair or unsound practices or that involve fraud, cheating, deception, deception, or manipulation.

For its part, the General Secretariat of the Adjudication Committees announced Securities disputes: Anyone who has entered into an agreement or contract with those convicted in the first decision regarding the declared violations has the right to file an individual or collective lawsuit with the committee to demand the annulment of the agreement or contract and the recovery of any money or other property that he paid or transferred pursuant to the agreement or contract, as stipulated in Paragraph (b) of Article (60) of the Financial Market Law.

The person affected by the violations subject to the second and third decisions also has the right to submit an individual or collective lawsuit to the Securities Disputes Resolution Committee. To claim compensation for damage from these violations, provided that this is preceded in any of the three final decisions by submitting a complaint to the Capital Market Authority in this regard, at (link to submit a complaint), noting that the General Secretariat of the Committees for Resolution of Securities Disputes will be announced to the public on its website when any class action lawsuit is filed so that the rest of the investors harmed by the same violations can submit to the Committee a request to join the class action lawsuit.

The Authority indicated that the General Secretariat of the Committees for Resolution of Securities Disputes It announced to the public on its website the identity of the violators after the violations and penalties were proven and final decisions were issued by the Securities Disputes Appeals Committee.

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