Saudi market regulators have barred several share dealers from trading in the local bourse and imposed heavy fines on them over manipulation as part of a new iron fist policy intended to restore discipline and confidence to the market.
The toughest anti-insider trading measures to be taken by an Arab bourse followed a recommendation by the parliament (Shura council) that the Capital Market Authority (CPA) should severely punish those involved in manipulation or speculation in the Tadawul bourse.
In reports this week, Saudi newspapers said CPA issued severe penalties against dealers who were found to have violated trading rules by indulging in practices that influenced prices with the aim of making quick profit.
The first case involved Mohammed bin Ibrahim Al Issa, who was barred from trading in the market or taking up any post in listed companies for three years. He was also ordered to pay back SR3.72 million (Dh3.64m), which he profited from the deal, dubbed by CPA as illegal share transaction.
Issa, who used his post as a board member of the Saudi Hotels Company to influence its share price, was also fined SR100,000.
Two other dealers found involved in insider trading were also banned from trading in Tadawul for three years. The first dealer, Ali Al Dosari, was fined SR50,000 while the second one, also Ali Al Dosari, was ordered to pay SR25,000.
Another case involved Mohammed bin Suleiman Al Rushoodi, who was accused of abusing his previous post as chairman of Qaseem Agriculture Company when he tried to influence its share price based on insider information. CPA fined him SR100,000 and barred him from trading in Tadawul and working at any of its 120 listed companies for three years.
"Such decisions are needed as they will support confidence in the market and ensure discipline. It gives a good impression to dealers that the market is governed by an authority that is serious in enforcing the law," said Ibrahim Al Nassir, former CPA adviser.
"I think the latest sentences by CPA will lead to a greater discipline in the market as they will curb manipulation and other offences. I think the authority should maintain that approach in its dealing with offenders and publicise all such cases and the persons involved."
In a statement after a lengthy debate on the local stock market last month, the Shura council urged regulators to take action to stop speculative trading in the bourse in order to save it from further collapse.
It said such measures, which should include heavy punishments to speculators and insider traders, would restore confidence that has been jolted by widespread speculation and the global financial crisis.
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