Al-Kathiri share compensation: The financial market deposits 60 million riyals for those affected
In a move reflecting the Saudi Arabian regulatory authorities' commitment to ensuring the integrity of financial transactions, the Capital Market Authority announced the closure of a major compensation case related to violations committed against Al Kathiri Holding Company shares. This process involved compensating more than 2,500 affected investors, with a total of SAR 60.74 million recovered from the illicit gains of three individuals against whom a final ruling was issued by the Securities Disputes Appeal Committee.
Details of the decision and the compensation mechanism
This swift action was taken in implementation of the decision issued on August 17, 2023, following a criminal case filed by the Public Prosecution after being referred by the Capital Market Authority. Compensation amounts were deposited directly into the bank accounts of those affected through the "Compensation Fund," which was established specifically for this purpose by a decision of the Authority's Board. This mechanism ensures that rights reach their rightful owners according to a precise distribution plan adopted by the Committee for the Resolution of Securities Disputes, thus sparing those affected the burden of lengthy legal procedures.
Legal framework and implementation of Article 59
This measure is based on the activation of Article (59) of the Capital Market Law, which grants the Authority broad powers to regulate compensation procedures for those affected. This article allows for the establishment of dedicated funds financed by recovered funds (illicit gains) from violators. This approach represents a qualitative development in the legislative environment of the Saudi capital market, as the Authority moves from a purely supervisory and punitive role to one of guaranteeing the rights of individual investors, thus strengthening the concept of effective justice in the market.
Enhancing confidence in the Saudi financial market
This announcement carries significant economic implications that extend beyond mere financial compensation; it sends a strong message of reassurance to local and international investors that the Saudi Stock Exchange (Tadawul) enjoys a robust regulatory environment that protects investors from manipulation. This fund, the third of its kind in less than six months, underscores the Capital Market Authority's commitment to pursuing violations and implementing the principle of "restoration of rights" as a fundamental component of its strategy to develop the financial sector, in line with the goals of Vision 2030, which aims to make the Saudi market a safe and globally attractive investment destination.
Standards for establishing compensation funds
The Authority explained that it relies on precise analytical tools to assess the need for establishing compensation funds in each individual case. The criteria include the extent of the damage, the value of the illicit gains, and the nature of the violations. In the Al-Kathiri case, given the volume of trading and the harm suffered by a wide segment of traders, the Authority determined that establishing the fund was the most effective and quickest way to compensate those affected, with some individuals receiving compensation exceeding 3 million riyals.
Preserving individual rights
Despite the comprehensiveness of the distribution plan, which relied on technical trading records, the Authority emphasized that this procedure does not preclude any investor who believes they were harmed and not included in the list from pursuing their claim. The door remains open for individual claims to be filed with the Securities Disputes Resolution Committee after submitting a formal complaint to the Authority, thus ensuring that no investor's rights in the market are lost.
