Saudi regulator fines top investor for insider trading

Saudi Arabia has fined a key local investor and shareholder in several listed companies for insider trading, according to the regulator's website.

The Capital Market Authority (CMA) said it has fined Mohammed Bin Ibrahim Bin Mohammed Al Issa 100,000 riyals ($26,667) after an appeal affirmed a ruling that Issa conducted "insider trading in shares of Saudi Hotels Co based on his membership of the company's board".

Reuters was unable to contact Issa directly. A member of his family said Issa declined immediate comment.

"He is the third biggest retail investor in the Saudi stock market after Prince Alwaleed Bin Talal and Suleiman Al Rajhi. Issa is worth some $2bn," said Abdulhamid Al Amri, a member of the Saudi Economic Association think tank.

Issa was ordered to pay the watchdog the 3.37 million Saudi riyals that ($898,600) the CMA said he has made in profit from trading in Saudi Hotels' shares. The CMA also banned Issa from working for any listed company for three years.

According to Saudi bourse data, Issa is the top shareholder in both Saudi Hotels and Savola Group and also holds a 10 percent stake in Riyad bank and a five percent stake in Banque Saudi Fransi, Calyon's Saudi affiliate.

Officials contacted at Savola, Fransi and Riyad confirmed that their shareholder was the same one fined by CMA.

Like others in the Gulf region, Saudi Arabia's stock exchange has been dogged by allegations of insider trading and manipulation of stock prices, and CMA has slapped hefty fines on many investors and executives found guilty of manipulation.

"Insider trading is plaguing the Saudi market probably more than any other market in the world. The CMA action will increase confidence in the market especially with foreign investors," Amri said.

Analysts say CMA needs to make adherence to corporate governance regulations compulsory for listed firms instead of voluntary in order to achieve greater progress in boosting transparency in the Arab world's largest stock market.

"The CMA is coming under greater pressure to become less lenient towards violators some of whom may seem untouchable because of their wealth or closeness to influential circles," said one banker who asked not to be named.

"It is instrumental as it (CMA) gradually opens the market to direct foreign ownership. I will not be surprised if we see more cases being brought to the open soon," he added.

In remarks published by Okaz newspaper on March 28, CMA's head Abdul Rahman Al Tuwaijri said his department was probing 92 cases of suspected violations including price manipulation and improper disclosure.

The cases are among 151 cases registered last year which involve suspected price manipulation, misleading, and irregular disclosures and insider trading, he said.

The Appeal Panel is formed by the Council of Ministers and hears appeals against decisions issued by the Committee for the Resolution of Securities Disputes (CRSD), a sort of first instance court that looks into cases in the stock market.

According to CMA website, a decision by the CRSD may be appealed to the Appeal Panel within 30 days of the notification date. (Reuters)

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