CMA closely monitors most complained-about entities; 20% reward for whistleblowers: Officials

Logo of Capital Market Authority (CMA)

The Capital Market Authority (CMA) departments, which are responsible for monitoring violations, follow up with the companies that fall under its supervision, and closely monitor the most complained-about entities, CMA officials told Argaam. 

They added that investors and market participants represent the first line of defense to safeguard the capital market from unfair practices. “Accordingly, the authority expects that the new regulations will contribute to regulating the reporting of financial market violations, which will, in turn, enhance investor confidence.”

The CMA received more than 1,360 complaints related to violations of the Capital Market Law in 2021, compared to 1,473 a year earlier.

Ali Aldakheel, General Director of the Communication & Investor Protection Division at the CMA, said the authority receives complaints via several channels, namely its website, registered mail, attendance of whistleblowers at the CMA headquarters, phone call, or the electronic application for investor protection.

He added that, according to the Draft Regulations on the Reporting of Violations of the Capital Market Law, the whistleblower is offered a reward of up to 20% of the value of fines and financial penalties, in case of fulfillment of the conditions stated in the draft regulations.

Salahuddin Khudair, Director of the Investor Protection Department, said the authority urges investors and market participants to report all issues that raise doubts about non-compliance with the Capital Market Law and its Executive Regulations, as well as the regulations of the Saudi Exchange (Tadawul), Securities Depository Center Co. (Edaa) and Securities Clearing Center Company (Muqassa).

“The authority considers all evidence and documents received,” Khudair added.

He indicated that the authority receives the complaints even if they do not have evidence to support the whistleblower’s suspicions. “The CMA follows up with such complaints and takes the appropriate measures.”

Khudair stressed that the authority deals with the whistleblower’s data and information with strict confidentiality.

Mohammed Al-Soqih, Head of the Reporting Unit, said if social network accounts, whether of individuals or popular entities, post recommendations on the purchase or sale of securities, this is deemed as practicing securities activities, which is required to be licensed by the CMA.

Published materials differ, but the CMA urges stock market investors to make their decisions based on sound principles after reviewing all information and data issued about companies to the public. It also encourages investors to use research reports published by licensed brokerage firms (capital market institutions).

In 2021, the market regulator referred several violators involved in various practices of alleged criminal violations, as well as manipulative and fraudulent practices in market trading. Their dealings were monitored according to the CMA’s powers under the Capital Market Law.

The CMA announced the Regulations on the Reporting of Violations of the Capital Market Law to regulate reporting such violations. It also determined rewards for reporting individuals and set the relevant regulations. The market regulator also developed a protection policy for reporting individuals.

To see regulations, click here