In a move reflecting the regulatory authorities' commitment to protecting investors' rights and enhancing transparency in the Saudi financial market, the Capital Market Authority (CMA) the deposit of compensation funds into the accounts of more than 2,500 investors affected by violations related to Al Kathiri Holding Company's . This step culminates the CMA's efforts to pursue those manipulating the market and enforce court rulings against them. Three violators were ordered to pay a total of SAR 60.74 million, representing the value of the illicit gains they achieved through their illegal trading activities.
Details of the decision and the compensation mechanism
The compensation process was based on the decision of the Securities Disputes Appeal Committee issued on August 17, 2023, which upheld the conviction of the violators based on the case filed by the Public Prosecution and referred by the Capital Market Authority. The compensation was distributed through a dedicated “Compensation Fund,” established by a decision of the Authority’s Board, to ensure that the rights reached their owners as quickly as possible and with minimal bureaucratic procedures, without the need for each affected party to file complex individual lawsuits.
Strategic shift in market protection (event context)
This fund is the third of its kind launched by the Authority in a short period of no more than six months, indicating a strategic shift in the mechanism for dealing with financial violations in the Kingdom. Previously, those affected had to wait for long periods and pursue individual or collective legal avenues to recover their rights. Today, however, with the activation of Article (59) of the Capital Market Law, the Authority has the power to regulate procedures for direct compensation using funds recovered from fines and illicit gains, thus enhancing the efficiency of the market's expedited justice system.
Economic importance and boosting confidence
This step is of paramount importance, extending far beyond mere financial compensation. It sends a strong message of reassurance to both local and international investors regarding the robustness of the legislative and regulatory environment in the Saudi Stock Exchange (Tadawul). The existence of clear and swift mechanisms for restitution is a cornerstone for attracting foreign investment and aligns perfectly with the objectives of Vision 2030 and the Financial Sector Development Program, which aims to position the Saudi financial market among the world's leading markets in terms of transparency and governance.
How to determine eligibility
The Authority clarified that the distribution plan relied on accurate technical records of transactions during the period of the violation, ensuring that compensation was provided to all those proven to have been genuinely harmed. The value of compensation for some investment portfolios reached more than three million riyals. However, the Authority emphasized that this procedure does not preclude any investor who believes they were harmed but are not included in the current list from filing a formal complaint with the Authority and subsequently a lawsuit before the Committee for the Resolution of Securities Disputes, thus guaranteeing the preservation of everyone's rights without exception.
