Authority of Saudi has issued a renewed warning against insider trading, with a legal expert stating the clampdown will increase confidence in the Kingdom’s capital markets.
In a post on their official Twitter account, the Saudi Arabian public prosecutor announced that the regulations are intended to promote transparency in securities trading and that violating the regulations would be punishable.
If a person acquires confidential internal knowledge through a family, business or contractual relationship, according to the authority, this person is prohibited from dealing with this information and trading in the securities of the respective company.
The rule also applies to third parties and the person is not authorized to share or allow confidential information to be shared with others, Saudi Arabia-based legal advisor Rabih Joudi told Arab News that there are rules to protect private information regarding publicly traded companies.
This will raise penal responsibility for those who intentionally or negligently disclose confidential information on a company, even if they do not work in the company and are not bound by contract with the company, but they got such information from a relative or friend who works in the company or is bound by an obligation of confidentiality toward the company,” Joudi said.
“The main criteria is that an average adult knows, or should have known, the importance of such information and that the disclosure of such information will affect the company, its activities, its shares, and securities,” Joudi added.
Joudi said the direction given by the Saudi Prosecutor’s Office will boost the capital markets in the kingdom and “largely suppress the question of trading based on inside information “will suppress to a large extent the issue of trading based on internal information.”
“This development will raise the bar for companies’ boards in relation to governance,” he stated.