As per the new published in http://www.arabianbusiness.com Saudi Arabia’s market regulator i.e. Capital Market Authority’s (CMA) Committee for the Resolution of Securities Disputes (CRSD  has barred the local unit of New York-based accountancy firm Deloitte & Touche from providing accounting services for listed companies in the kingdom for two years for breaching rules on accumulated losses.

The regulator  has also stepped up penalties already imposed on the local unit, Deloitte & Touche Bakr Abulkhair & Co, over a long-running case involving its work for troubled Saudi contractor Mohammed al-Mojil Group (MMG). The decision states that listed companies and entities licensed by the CMA must refrain from engaging with Deloitte & Touche Bakr Abulkhair & Co in relation to audit services for two years beginning in June 2016. Detailed Decision is as follows :-

An Announcement from the Capital Market Authority regarding the decision issued by The Committee for the Resolution of Securities Disputes (CRSD) to convict violators of the Capital Market Law and its implementing regulations:

18/06/2016

Further to the Capital Market Authority’s announcement on its website on 18/01/1436H corresponding to 11/11/2014 regarding the issuance of a CMA Board resolution to file a lawsuit before The Committee for the Resolution of Securities Disputes (CRSD) against the board members of Mohammad Al Mojil Group Company during its IPO stage and against some of the company’s executives and certified public accountants during the period from 2008 until 2011 as they have violated the Capital Market Law and its Implementing Regulations. CMA wishes to clarify to the public that on 10/09/1437H corresponding to 15/06/2016 A decision was issued by the Committee for the Resolution of Securities Disputes (The Resolution) to convict a number of the defendants for violating paragraph (A) of Article (49) of the Capital Market Law and Article (7) of the Market Conduct Regulations for conducting practices that formed manipulation and fraud and created a misleading and incorrect impression regarding the value of Mohammad Al Mojil Group Company security, which convicted them in the violations committed in the IPO’s stage.

The (CRSD) resolution included a number of sanctions on the convicted; and in accordance with the following detail:

  1. Oblige one of the convicted to pay (1,620,000,000) one billion, six hundred and twenty million riyals to CMA’s account for the illegal profits achieved as a result of violations mentioned.
  2. Impose a fine on the convicted in the amount of (2,700,000) two million and seven hundred thousand riyals, of which (300,000) three hundred thousand riyals on each of them.
  3. Imprison three of the convicted for a term ranging between three to five years.
  4. Refrain the convicted from working in listed companies on the Saudi Stock Exchange for a term ranging between five to ten years.
  5. To prevent the acting certified public accountant company for Mohammad Al Mojil Group Company (during violations period), from providing any legal accounting for authorized persons, or any securities’ issuer for a period of two years.

CMA would like to clarify that this resolution is not final and the parties can appeal before The Appeal Committee for the Resolution of Securities Disputes (ACRSD) in 30 days after receiving it. CMA will announce any material developments regarding this lawsuit once it occurs.

CMA in this regard points out that the CRSD explained that the illegal  profits in this case represents the difference between the IPO share value and the real share value, in which  once the resolution is final and the amount has been collected, will be payed to those who prove being effected by those violations. The defendants should commit to compensate the exceeding amount.

The committee decided not to hear the lawsuit regarding the violations that occurred after the IPO by the convicted and not to hear the lawsuit regarding the violations committed by individuals who are not convicted in this case due to the fact that their violations occurred after the IPO. Based on that, CMA also intends to coordinate with the Bureau of Investigation and Public Prosecution (BIPP) to file a lawsuit against the defendants and anyone else found to be responsible for the subsequent of the IPO stage violations (in which the CRSD did not include in the resolution).

It is important to note that the resolution is regarding the public action and that the Plaintiffs’ private action of those affected by these violations and others, whether affected by the IPO stage or the violations after that and whether they have received the violated shares during the IPO or through the purchase of shares from the market,  they are all entitled to file a suit for compensation as per the Law.

CMA insures its devotion to apply justice, efficiency, and transparency in securities transactions as well as protect investors from illegal acts.

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Category : CA CS ICWA (3093)
Type : News (11054)
Tags : Audit (413) Big 4 (12)