Chapter Six - Prohibitions

How to prove someone made false Statements and what are the repercussions?

can be held liable for damages if the claim is related to the purchase or sale of a security or securities. The claimant will have to prove that:

• they were not aware the statement was untrue, and

• they would not have purchased or sold the security, or securities, if they were aware of the untrue statement, or they would have done so at a different price.

Sanctions for Violators of the Law

1. a warning and/or impose a penalty of a maximum of SAR 5 million per violation

2. forcing the person to stop the act subject to the legal action

3. forcing the person to take the necessary steps to be taken to avert the violation, or take necessary corrective steps

4. forcing the person to pay damages resulting from a violation, or pay a penalty of to up to three times any realized gains or avoided losses as a result of the violation

5. suspending the trading in the security

6. barring the violating person from acting as a broker, portfolio manager or investment adviser for such period of time as is necessary for the safety of the market and the protection of investors

7. seizing and executing property

8. a travel ban

9. barring from working with entities subject to the Authority’s supervision.

10.a fine of not more than SAR 25 million per violation

Sanctions for accessories to Violators of the Law

• restrictions on their licensed activities

• restriction on their functions or operations

• suspension of their activities for a maximum of 12 months, or

• revocation of their license.

who is responsible for regulating the compensation from illegal gains?

The Authority is responsible for regulating the compensation procedures. They may establish compensation funds funded by the illegal gains collected in the Authority’s accounts. The distribution of compensation will be approved by a decision of the Committee.

how long can the authority suspend a license without a hearing or notice?

for a period of maximum 60 days

penalty for Misstating or Omitting Material Facts

The damages that can be awarded is the difference between the price paid or received (with a maximum of the price at which they were offered to the public), and the price on the Exchange prior to the claim was made. If the defendant can prove that any part of the decline in value is not related to the omission or the incorrect statement the damages will be reduced accordingly.