JEDDAH: Najmuaddien Ahmed Zafer, chairman of Bishah Agriculture Development Co., has been sentenced to three months in jail and fined SR100,000 for violating stock exchange regulations, the Capital Market Authority (CMA) said Tuesday.
Zafer was found guilty by the Committee for the Resolution of Securities Disputes (CRSD), a kind of first instance court that looks into cases in the stock market, for exchanging Bishah stocks based on internal information he obtained as the chairman of its board of directors.
The CMA said he had violated Article 50 of the Capital Market Law. Zafer should also deposit SR52,690 he profited from the illegal stock sales in CMA’s account.
Zafer will be banned from working in any company listed on the Saudi bourse for five years, said a CMA statement carried by the Saudi Press Agency. “The authority is determined to implement the Capital Market Law and its executive bylaws to protect stock dealers from illegitimate practices.”
According to the CMA website, a decision by the CRSD may be appealed to the Appeal Panel within 30 days of the notification date. It was not immediately clear if Zafer would be allowed to appeal the ruling.
A Saudi investor, who did not want to be named, defended CMA’s action. He said like other markets in the Gulf, Saudi Arabia’s stock exchange had been dogged by allegations of insider trading and manipulation of stock prices. The decision against the Bishah chairman will definitely deter authorities from insider trading and will help boost investor confidence.
The CMA verdict will help achieve greater progress in boosting transparency in the Arab world’s largest stock market, he added. In June, the CMA fined Mohammed bin Ibrahim bin Mohammed Al-Issa SR100,000 after an appeal affirmed a ruling that Al-Issa conducted “insider trading in shares of Saudi Hotels Co. based on his membership of the company’s board.”
Al-Issa was ordered to pay the watchdog the SR3.37 million that the CMA said he has made in profit from trading in Saudi Hotels’ shares.
The CMA also banned him from working for any listed company for three years.
In July, the authority fined Abdulaziz Almediheem SR100,000 and banned him from share trading for three years.
The CMA’s board of commissioners on Sunday revoked the license granted to Portfolio Brokerage and Financial Services Company for not fulfilling the requirements and conditions prior to commencing business.
“The action of the CMA is part of an ongoing and concerted effort to enhance transparency and build necessary legal measures to protect shareholders as well. Altogether these steps are essential in the biggest stock market of the Middle East,” John Sfakianakis, a Riyadh-based economist, said.
The Saudi stock market reacted positively to the CMA verdict. The Tadawul All-Share Index (TASI) edged higher 0.84 percent to close at 5,759.58 on Tuesday after plunging 2.5 percent on Monday.
