Capital Market Authority launched investigation into the firm in November after Mobily restated a year and a half of its earnings
Saudi Arabia's market regulator has referred a case of suspected insider trading at telecoms operator Etihad Etisalat (Mobily) to public prosecutors, it said on Wednesday, weeks before the market is due to open to direct foreign investment.
The Capital Market Authority (CMA) launched an investigation into the firm last November after Mobily, 28 percent owned by the United Arab Emirates' Etisalat, restated a year and a half of its earnings.
In a brief statement, the regulator said more than one person was suspected of violating regulations on insider trading, but it gave no details.
It also said procedures relating to other suspected violations involving Mobily, the country's second-biggest telecommunications firm, were ongoing. It did not elaborate. Mobily declined to comment on Wednesday.
Once a favourite of retail and institutional investors, Mobily's fortunes started to unravel late last year when it began disclosing accounting errors which it said were due to excessive booking of revenue from wholesale broadband leases and mobile promotional campaigns.
In late February, the company announced it had suffered a $243 million loss in 2014 - instead of an earlier announced profit - and expected to breach covenants on long-term loans.
The CMA's investigation has centred around suspicion that the company violated one of its market listing rules and two articles of the Capital Market Law, including provisions against insider trading, the regulator said in a previous statement.
Foreign institutions will be allowed to buy Saudi stocks directly from June 15 and Saudi authorities want to signal that they will not allow poor corporate governance to complicate the market opening, analysts said.
"The CMA has a reputation for being the strictest regulator in the region and wants to maintain that reputation, especially in light of the losses investors in Mobily have had to deal with," said an analyst at an international bank in Dubai, asking not to be named because of the sensitivity of the matter.
Earlier on Wednesday, Mobily said it was studying the possibility of selling its telecommunications towers but had not reached any agreement yet.
Mobily's shares have plunged from around 90 riyals last October to 35.50 riyals, near-multi year lows. In late April it appointed Khalifa Hassan Al Shamsi as managing director, replacing Khalid Al Kaf, who left Mobily in February.