Saudi investor accepts watchdog's fine

INSIDER TRADING: Mohammed bin Ibrahim bin Mohammed al-Issa accepts 100,000 riyals fine for insider trading on Saudi stockmarket, but still denies original charge. (Getty Images)

A top Saudi retail investor denied on Saturday that he engaged in insider trading but said he accepted a verdict earlier this week by the bourse's watchdog which fined him for the alleged practice.

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

Issa told Reuters he was not considering altering his stake in any of the firms in which he is a shareholder, including Saudi Hotels, Savola Group, Riyad Bank and Banque Saudi Fransi, Calyon's Saudi affiliate.

"What they (CMA) used as a basis for the (verdict) was that I had information about a merger of Saudi Hotels and that I'm a member of the board: That is not true," he said in a telephone interview.

"They (CMA) asked the company (Saudi Hotels) and they (company) said I was not aware of this. CMA decided the verdict and I accepted. I rest the matter with God," he said.

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

Issa holds a 22.4 percent stake in Saudi Hotels, 11.9 percent in the Savola conglomerate, a 10 percent stake in Riyad Bank and 5 percent in Banque Saudi Fransi.

In addition to a 16.6 percent stake in Taiba Holding Co, 85-year old Issa's share holdings are worth some 7.11 billion riyals based on the previous session's close.

With billionaires such as Prince Alwaleed bin Talal and Sulaiman al-Rajhi, Issa is believed to be among the top five retail investors in the Arab world's largest bourse.

Issa said he does not plan to exit any of these firms or to reduce his stakes in any of them.

"The Saudi (stock) market is promising and whoever has got money should invest in the Saudi market especially in the current circumstances.

"Why would my investment be affected (by the CMA's decision)? They don't have anything to do with this.

"If the need (to sell) arises, God forbid, I sell, if the need does not arise then my shares are available in good banks and in good firms. I don't have any reason to exit them."

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 the CMA has slapped hefty fines on many investors and executives found guilty of manipulation.

Analysts say the 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. (Reuters)

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