Class action against MMG board members, employees 'legal precedent': Lawyer

Lawyer Saleh bin Abdulaziz Al-Sumait

The decision of the Committee for Resolution of Securities Disputes (CRSD) to approve the class action filed by an investor against a few board members and employees of Mohammad Al-Mojil Group (MMG) serves as a precedent in the financial judicial system, Lawyer Saleh bin Abdulaziz Al-Sumait told Argaam.

Al-Sumait confirmed that the Capital Market Authority’s (CMA) announcement of the CRSD decision for investors in MMG’s shares from Feb. 22, 2022, until the date of the stock's suspension, was in accordance with the regulations approved by CMA five years ago that regulate class actions.

He added that this case is considered a precedent in the financial judiciary, as it was not based on a penal decision issued by the CRSD, but accepted based on the request of one investor. This means the absence of the public right and that the claim is limited to the private right of all those joining the class action that was approved by the CRSD.

The regular procedure that will be implemented following the approval of the class action is to consider the applications for joining that have been approved by the CRSD, to confirm whether they are entitled to compensation or not, and to determine the amount of due for compensation, said the lawyer.

Al-Sumait also lauded the judicial developments in the financial market system, as CMA is the first body to introduce the class action lawsuits procedure, which has become a key judicial form. It facilitates claims for those affected by common disputes to plead in one judicial process and within specific time periods that are much less than what each individual case would take before the judicial circuits separately.

He also stressed that class actions preserve rights to a greater extent, given the high rate of compatibility of judicial rulings with those who share the same dispute.

He indicated that the adoption of the class action found legal support from the Individual Investors Protection Association, which plays an integral role with the relevant regulatory authorities.

CMA stated, on Jan. 11, that the CRSD accepted the class action filed by an investor against some board members and employees of MMG, according to Argaam's data.

The investor claims compensation for the damage he suffered due to the announcements made by the company on Feb. 22, 2012, and April 21, 2012, which created a misleading and false impression about MMG’s financial position.

The approval came after the number of requests with the same legal base, and claimed facts reached the number required for registering a class action.