RIYADH — The Saudi Capital Market Authority (CMA) explained the public right lawsuits filed against violators of the Capital Market Law and its implementing regulations as well as the rules and regulations of the Exchange. Private right lawsuits are those between individual investors or any group of investors in securities or against an authorized persons or any of the previously mentioned parties.
All final public right lawsuit verdicts issued by the Committee for the Resolution of Securities Disputes or the Appeal Committee in regard to the violations of the Capital Market Law and its implementing regulations are announced by the CMA.
CMA stated in a press release that announcement of any final verdict in a public lawsuits are designed to help any investor in the Saudi capital market understand their rights according to the Capital Market law, to file a private right lawsuit against any violator of the Capital Market Law or its implementing regulations whether he is a natural or a legal person.
This includes violations where the date and time of its occurrence are mentioned in the CMA announcement and all securities related to the violation as per clause (A) of Article 57 of the Capital Market Law. Clause (A) states that: " Any person who violates Article 49 of this Law or any of the regulations or the rules issued by the Authority pursuant to the said article by engaging in an act or transaction for the purpose of intentionally manipulating the price of a security, or participating in such act or transaction, or is responsible for a person who undertakes such act or transaction shall be liable for damages to any person who purchases or sells the security whose price has been significantly adversely affected by such manipulation for the amount such person’s purchase or sale price was so affected."
Article 57 stresses that the right to file a compensation lawsuit is guaranteed under the law for any person buying or selling a security that actions of the manipulative person.
CMA has also stated that as soon as any suspected violation is detected by its technical and monitoring systems, procedures to deal with the possible violation are enacted. If credible evidence and materials are collected in support of filling a case for a suspected violation of the capital market law or any of its implementing regulations thereafter, the relevant CMA department would either make a judgment on the possible violations being under the jurisdiction of the Bureau of Investigation and Public Prosecution or under the jurisdiction of the Committee for the Resolution of Securities Disputes (CRSD) pertaining to the possible violators of the Capital Market Law and its implementing regulations.
Applying the regulatory sanctions on the violators is demanded by the lawsuit whether it is filed by CMA or the Bureau of Investigation and Public Prosecution. This may include paying all the profits realized through the manipulative act to the public coffers, including the illegal profits on investment portfolios of other people who were not convicted by the CRSD or the Appeal Committee but were a result of the violations committed by the plaintiff.
The names of the plaintiffs if found guilty of a violation through a final verdict of the Committee for the Resolution of Securities Disputes (CRSD) or the Appeal Committee in violations of the Capital Market Law and its implementing regulations would be made public by the CMA.
The law guarantees that all civil cases (private right lawsuits) filed by any affected person separately to the Committee for the Resolution of Securities Disputes (CRSD) against any violator who was previously convicted in the penal lawsuit, of violating the Capital Market Law and its implementing regulations requesting civil compensation for all the losses and damages resulting from these violations. Final compensation decision shall be enforced through the authorized government agency under Article 25 of the Capital Market Law.
CMA, in its efforts to promote investor awareness, would urge investors to read the guidebook titled "How to File a complaint" which explains the procedures for filing a complaint in a securities disputes, Investors may also find useful reading the guidebook titled "Dealing with Committees for Resolution of Securities Disputes " published by The Committee for the Resolution of Securities Disputes. — SG
