The Capital Market Authority (CMA) announced on Thursday that the Appeal Committee for Resolution of Securities Disputes (ACRSD) convicted eight investors of violating the Capital Market Law and its executive regulations. The committee slapped fines amounting to SR 9.6 million and obligated them to pay SR292.8 million after convicting them of making illicit gains in their investment portfolios, in addition to three other portfolios belonging to minor children of one of the convicts. The ACRSD issued its final decision convicting Abdulaziz bin Abdullah Albanyan and four of his sons: Faisal, Sultan, Abdullah and Fahad, and two of his daughters: Reem and Nouf, along with Hind bint Muhammad. They were found guilty of violating Article 49 of the Capital Market Law and Article 2 of the Market Conduct Regulations. The violation was evidenced by the synchronicity in their trading of shares in two companies listed on the Saudi Exchange; Al Kathiri Holding Co. and Anaam International Holding Group. This included a concurrent increase in their ownership percentage and a coordinated exit from these companies" stocks at various times, primarily in the year 2020. The ACRSD ruled for the imposition of a precautionary seizure on all movable and immovable property of the convicted individuals, including bank and investment accounts, until the sums awarded are collected. It was revealed in the investigations that the scheme’s inception dated back to June 7, 2020, when Sultan bin Abdulaziz Albanyan purchased 225000 shares in Al Kathiri Holding Co. from a senior company official. This transaction occurred 19 days after the company announced that it had submitted to the CMA a file requesting an increase in its capital by offering priority rights shares. On the 11th day of the same month, Fahad bin Abdulaziz Albanyan transferred 225000 shares in the same company to the portfolio of his minor daughter, before purchasing a similar amount on August 23, 2020, from one of the company’s senior officials in a private deal. One day later, and until October 5 of the same year, the convicted individuals carried out purchase transactions and some speculation transactions on the share price, which resulted in an increase in their combined ownership percentage to 24 percent without disclosing to the Saudi Stock Exchange Company Tadawul about their ownership of such percentage despite the familial ties that connected them. This period also saw an increase in the share price by more than SR54. On October 5, Fahd bin Abdulaziz Albanyan, through his minor children"s portfolios, placed purchase orders in the closing auction to achieve a high closing price, coinciding with the extraordinary general assembly’s meeting to vote on capital increase, the price of which was to be determined based on the closing price of that day. The following day, the company announced the results of the extraordinary general assembly meeting, which included approval for the capital increase. During the period from October 8 to November 15 of 2020, the convicted individuals sold part of the rights deposited for them and subscribed using part of it, before selling the shares and exiting from the company’s share on November 16. Investigations also revealed the existence of share transfers between the brothers’ portfolios through simultaneous sell and buy orders for the same quantity, timing, and price. Fahd bin Abdulaziz Albanyan transferred approximately SR4.7 million to Abdullah to provide liquidity for purchasing shares in the same company and bought 100,000 shares in the same company previously owned by Fahd, following the latter"s desire to sell them. Regarding violations related to the share of Anaam International Holding Group, the company announced on February 9, 2020 the recommendation of the Board of Directors to increase the company"s capital by offering priority rights shares in the amount of SR75 million so Fahad bin Abdulaziz Albanyan transferred 74,900 shares to his minor son"s portfolio. After three days, he purchased the same quantity again, as some of the purchase transactions had an impact on the share price. The next day, he transferred the same quantity to the portfolio of his minor daughter, before making purchase transactions of the share in amounts that reached 73,910 shares during the period from May 19 to June 1, 2020. On the 6th day of October of the same year, the company invited its shareholders to attend the extraordinary general assembly meeting that included an increase in the company"s capital. Starting the next day, over 20 consecutive days, the convicts engaged in speculative activities, collectively increasing their ownership to 27 percent without disclosing this to Tadawul, despite their familial ties. This period witnessed a share price rise of approximately SR115. On the 27th of the same month, Sultan bin Abdulaziz Albanyan, and Fahad bin Abdulaziz Albanyan, through the portfolio of his minor daughter, entered purchase orders in the closing bid with the aim of achieving a high closing price as being the day set for the extraordinary general assembly to be held to vote on the capital increase. At the general assembly, the price of the rights issue is scheduled to be determined based on the closing price for the same day, before the company announces the next day the results of its meeting, which included approving an increase in the company"s capital. This announcement was exploited by the convicted individuals from the day of its occurrence, from October 28 until November 15 2020, to begin selling their shares and exiting from the share, after they placed orders with the aim of influencing the price of the shares, in addition to entering purchase orders in the closing bid with the aim of achieving a high closing price. The monitoring system at the CMA detected the violations committed by the convicted individuals, and the existence of private deals and share transfer transactions to transfer ownership of these shares, as well as their trading in the shares of the two companies based on prior coordination and agreement between them, and with the aim of owning a large percentage of the shares of the two companies without disclosing this to Tadawul, in order to avoid announcing this on the Tadawul website to the public, especially in light of their combined ownership of Al Kathiri Holding Co. share reaching approximately 24 percent, and 27 percent in Anaam International Holding Group share, as such is considered a violation of the Law that requires anyone who owns, directly or for him, or has interest in a percentage of 5 percent or more of any class of the issuer"s shares entitled to vote, or the issuer"s convertible debt instruments, must be disclosed within a period not exceeding the end of the third trading day following the execution of the deal or the occurrence of the event that led to the realization of this ownership or interest. The notification disclosure must include a list of persons who have an interest in the shares or transferable debt instruments that they own or control, whether they are relatives, or a company controlled by the same person who owns that interest, or other persons acting in agreement with him to obtain an interest or exercise rights of voting in the issuer"s shares or convertible debt instruments. The CMA explained that the final decision of the ACRSD came as a result of joint coordination and cooperation between the CMA and relevant concerned authorities, and in light of the public penal lawsuit filed by the Public Prosecution, referred to it by the CMA, against a number of violators of the Capital Market Law and its executive regulations. The CMA stressed the importance of investors’ confidence in the capital market for its growth and prosperity. The CMA said that it is continuously monitoring any violations of the law and will not hesitate to pursue manipulators and take punitive measures against them.