DUBAI (Reuters) - Saudi Arabian authorities imposed about $83 million in penalties for insider trading in the shares of Etihad Etisalat (Mobily), the country’s second-largest telecommunications operator, the securities regulator said on Monday.
The penalties comprised one of the largest punishments ever handed down for a securities scandal in the kingdom. Over the past decade, Saudi authorities have been among the region’s most aggressive in cracking down on illicit equities trading.
The Appeal Committee for the Resolution of Securities Disputes ordered Abdulaziz Alsaghyir Business Investment Co to pay the Capital Market Authority (CMA) 281 million riyals ($74.7 million) for insider trading in Mobily shares, the CMA said.
That sum was to settle losses on the company’s investment portfolio which it had avoided through illicit trading, according to a CMA statement.
The committee also fined four individuals, including former Mobily chairman Abdulaziz Al Saghyir, between 100,000 and 200,000 riyals each for disclosing or trading on insider information. One of men, Mohammed Alashgar), was ordered to pay an additional 30.5 million riyals.
Legal action was taken against the defendants after Mobily restated 27 months of earnings, citing accounting errors related to the premature booking of revenue from wholesale broadband leases and mobile promotional campaigns.
The accounting scandal initially came to light in late 2014 and Al Saghyir resigned as chairman in February 2015, citing health reasons. The restatements cut 1.76 billion riyals off profit made by the company, causing its shares to plunge.
Reporting by Andrew Torchia, editing by David Evans