Publisher: Maaal International Media Company
License: 465734
The Capital Market Authority – thankfully – has organized class action lawsuits, in order to standardize procedures and shorten time, to compensate those affected by the financial market. The observer of the class action lawsuits that the Committee undertakes for the Resolution of Securities Disputes (Competent Judge to consider stock disputes and listed companies), can see the great effort and overloaded that played in order to protect the market, discipline manipulators, and compensate those affected.One of the most important events that affected our financial market was the manipulation and misinformation that occurred in Etihad Etisalat Company (Mobily), which the authority thankfully assumed by investigating and identifying violations and those responsible for them. Securities Disputes Appeal Committee had previously issued its final decision no.(1997/2020) for the year 1442 A.H.Upon the foregoing, the Committee thankfully announced the right of those affected to Bring an action seeking compensation, whether by an individual case or by joining a class action suit, some actually submitted and some joined. The Committee thankfully authorized the acceptance and approval of the registration of the Class Action Suit, and announced the extension of the period for accepting requests to join the Class Action Suit, for another ninety days, allowing everyone to claim compensation. The trial sessions were held and the space was opened for pleading, and the preliminary decision of the committee was issued, which was announced by the General Secretariat of Committees for the resolution on 10/11/1443 AH corresponding to 9/6/2022 AD in Class Action Suit No. (229/1442), against (13) defendants, and filed by (1,045) claimant, to claim compensation for them, based on the actions committed by the violators which created an incorrect and misleading impression regarding the value of Etihad Etisalat Company (Mobily) and what they committed misleading and incorrect data in the company’s financial statements during 2013 and 2014, which led to an inflated revenue in the company’s financial statements.
The primary decision ended with obligating five of the defendants to jointly pay to the claimants an amount of (1,225,101,291) riyals, according to the entitlement of each of them.
To confirm that the decision is preliminary, the committee is forced to announce it on its official website, to inform all that any of the partiesof the class action (claimants and defendants) has the right to appeal the decision.
I know that this decision, despite its compensation to lots of affected, who will thank and praise, but that in return we will hear from others dissatisfaction, either because they didn’t join the class action and did not ask for their compensation. One of the principles of the committee is “there is no compensation without claim” or because they are not covered by the conditions and cases of compensation for this lawsuit. Each lawsuit has a reason and requirements to compensation for the affected.
Moreover, the most important challenges that face these lawsuits are the implementation of their decisions. In other hand, the suffering of the affected shareholders of )Al-Mojil) (MMG) Company is clear, as judgments were issued to compensate them, some of them were able to implement, and others were unable to implement due to the lack of balances, accounts and funds with the convicts that is not enough for compensation.
This challenge will be the most prominent challenge to the recent ruling issued to compensate the affected of Mobily. The amount of compensation exceeds one billion riyals, and it was issued against former employees of Mobily. In fact, the ruling was issued in absentia for three of the five convicted persons, which means their indifference to the case from the beginning. In general, when implementing the decision to pay the sums of the judgment, the enforcement law will face inadequate convicts’ funds.
Which leads to emphasize on the importance of inserting and holding the Emirates Telecommunications Company (Emirates Telecommunications Corporation, formerly) as the managing partner of Etihad Etisalat Company “Mobily”, so that judgments are issued against the Emirates Telecom Group in solidarity with the five convicts against whom the last decision was issued, If the decision gained deterministic. And accept the class action lawsuit against the Emirates Group. Otherwise, the recent ruling issued to compensate the affected people with more than one billion riyals, it will be just words on paper, which will not help the shareholders.
Regarding to our legal responsibility, we whisper some of the reasons for the responsibility of the Emirates Telecommunications Group Company for the transgressions that occurred in “Mobily” in Saudi Arabia:
First: Being the subordinate responsible for its subordinates, and final judicial decisions have been issued by the Appeals Committee in Securities Disputes incriminating a number of violators, and it has been proven that they committed violations and abuses in Mobily, one of them is Mr. Khaled bin Omar Al Kaf, as a member of the Board of Directors and Managing Director. And the CEO of Mobily, who is appointed by the Emirates Telecommunications Group and related to company. In addition to the rest of the names who have been incriminated and they are appointed by the Emirates Group in the management of “Mobily”.
there is no doubt that Jurisprudence, law and judiciary require the responsibility of the subordinate for the actions of his subordinates, especially if it is proven that the convicts are those appointed by the Emirates Group and working with that company, as members of the Board of Directors of Mobily, or officials and executives in the company.
Second: The Emirates Group was the controller of Mobily, its management, its financial accounts, and the determination of the company’s external auditor. At the time of the violations, it owned 27,45% of Mobily’s shares. This indicates the following:
Finally, If Mobily’s shareholders have purchased at prices above 90 riyals per share, Which got down after announcing about transgressions and mistakes to about 60 riyals, and subsequent collapse. Calculated by multiplying the price difference (30) SAR with the number of shares (770,000,000) shares, The harm during one week has exceeded SAR 23 billion. Never mind, the value of the security continued to decline until it reached 15 riyals. Who will compensate the affected?Let’s conclude two things:Firstly, thanks for the Committee for its recent decision and efforts to compensate those affected.Secondly, standing with the commission and the authority go after manipulators and giving the affected decisions to be implemented.
Asem abdulwahab Alessa
Lawyer and specialist in capital market cases
@AsemAlessa