Business | Markets
Saudi regulator cracks whip for more transparency
It has happened twice. In February 2006 and last October, millions of Saudis saw their savings evaporate overnight as the Saudi bourse, the Arab world's biggest, crashed.
- Financial Times
- Published: 22:48 July 2, 2009
Riyadh: It has happened twice. In February 2006 and last October, millions of Saudis saw their savings evaporate overnight as the Saudi bourse, the Arab world's biggest, crashed.
As the index plummeted, anger rose among retail investors who had ploughed family savings and loans into the market hoping for a quick gain. They accused the government of turning a blind eye to "big sharks".
But, in what analysts say is a move towards greater transparency, the Capital Market Authority (CMA), the market regulator, took a rare step late last month and fined two Saudi investors $26,673 each for insider trading.
The CMA has imposed fines in the past and suspended trading in the shares of suspected shell companies, but bankers say this time the wealth and importance of one of the investors targeted make it significant.
Mohammad Bin Ebrahim Al Eisa was fined, the CMA says, because he had used his position as a board member of Saudi Hotels to gain insider information and had traded in the company's shares. In an interview with Reuters, Al Eisa denied insider trading.
Al Eisa holds 11.9 and 10 per cent stakes in Savola Group and Riyadh Bank respectively, and a stake in the Banque Saudi Fransi, Calyon's Saudi affiliate.
The other investor, Mohammad Bin Salah Al Rushudi, was fined because he allegedly used insider information during his tenure as chairman of Al Gassim Agricultural Company to trade in its shares. Al Rushudi has also denied the accusations.
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