The Saudi Capital Market Authority (CMA) has completed the disbursement of compensation to investors harmed by violations related to Watani Iron Steel Co. shares during its listing on the Nomu Parallel Market.
Five individuals were found guilty of illegal trading activities before and after the company’s direct listing. The Appeal Committee for Resolution of Securities Disputes (ACRSD) ordered them to return SAR 41.4 million in illicit gains, following a lawsuit filed by the Public Prosecution at the CMA’s request. The decision was made public on 4 April 2024.
The CMA confirmed that affected investors received payouts via the Compensation Fund, which was established by the CMA board. The fund operates under a distribution plan approved by the Committee for Resolution of Securities Disputes (CRSD).
The compensation covers investors who suffered losses during the period of the violations, based on verified trading records. Some individuals received more than SAR 1 million, marking one of the largest payouts authorised by the CRSD.
The CMA clarified that investors not included in the distribution plan but who believe they were impacted can still file individual claims with the CRSD.
This case is the latest example of the CMA invoking Article 59 of the Capital Market Law, which empowers it to recover illegally gained profits and establish compensation mechanisms. The Authority noted that this approach complements traditional legal avenues, such as class actions and personal lawsuits, and is designed to strengthen investor protection and market confidence.
The CMA said it will continue to assess such cases based on criteria including the number and severity of violations, impact on the market, and feasibility of recovering funds. It added that its framework for investor compensation draws on international best practices tailored to the structure of the Saudi capital market.
