Exclusive to Maaal: Names of 1045 shareholders in “Mobily” awarded SR1.22 bln by CRSD

Committee for Resolution of Securities Disputes (CRSD) issued a preliminary ruling against 5 executives of Mobily, which included compensation in favor of 1,045 shareholders who were affected by actions that created an incorrect and misleading impression regarding the value of Mobily’s securities, based on data collected by Maaal.

The Committee issued an obligation to oblige Badr bin Saleh bin Hammoud Al-Tarifi (Saudi), Muhammad Hefni Mahmoud Thabet (Egyptian) in absentia, Khalid bin Omar bin Mohsen Al-Kaf (Emirati), and Thamer bin Muhammad bin Abdullah Al Hosani (Emirati) in absentia, And Ahmed Hosni Ali Abdel Nabi (Egyptian) in absentia, to jointly pay the plaintiffs an amount of SR 1.225 billion according to the entitlement of each of them – and their number is 1,045 – as shown in the attached file.

The ruling comes in continuation to the defendants’ conviction in a class action case against them, for their actions that created an incorrect and misleading impression regarding the value of Mobily’s security by proving misleading and incorrect data in the company’s financial statements during quarters in 2013-2014 that led to an inflated revenue in The company’s financial statements.

According to the disclosure of the data of the shareholders who were compensated, the amounts of compensation issued to them varied, as 112 shareholders received compensation that exceeded one million riyals out of the total shareholders who were issued compensation, while the rest was less than one million riyals, including a shareholder who was awarded compensation of only 69 riyals. According to the monitoring, two shareholders were compensated with compensation exceeding 100 million riyals, where the first received a compensation of more than 164 million riyals, while the second compensation, which is an endowment institution for humanitarian works, – in terms of the volume of the amounts issued for compensation – amounted to an amount exceeding SR 113.8 million.

It is noteworthy that the crisis of Etihad Etisalat Company (known as Mobily) appeared in 2014, and the crisis led to the dismissal of the former CEO Khaled Al-Kaf, and the company’s share deteriorated to low levels, and the company suffered in its financial results from declines and recording losses before returning to profits in 2019.

The General Secretariat of the CRSD had announced the issuance of the final decision of the Appeal Committee in Securities Disputes No. (1997 / L.S. 2020) for the year 1442 AH, dated 01/14/1442 AH corresponding to 02/09/2020 AD, in the lawsuit filed by The Public Prosecution (and referred to it by the Capital Market Authority) against Badr bin Saleh bin Hammoud al-Tarifi, Muhammad Hefni Mahmoud Thabet, Khaled bin Omar bin Mohsen al-Kaf, Thamer bin Muhammad bin Abdullah al-Hosani, and Ahmed Hussein Ali Abd al-Nabi. Muhammad bin Abdullah Al Hosani, Ahmed Hussein Ali Abdul Nabi in absentia, and the rest of the defendants whose names are mentioned in their presence, in violation of Paragraph (a) of Article (49) of the Capital Market Law, for their actions that created an incorrect and misleading impression regarding the value of the security belonging to Etihad Etisalat ( Mobily), by proving misleading and incorrect data in the company’s financial statements for the second, third, and fourth quarters of 2013 and the first, second, and third quarters of 2014, which led to an inflated revenue in the company’s financial statements for those periods.

The previous decision of the Appeals Committee included the imposition of a number of penalties on them; according to the following details:

First: Badr bin Saleh bin Hammoud Al-Tarifi:

Imposing a fine of $300,000.

Banning him from managing portfolios and working as an investment advisor for a period of (7) years, and preventing him from working in companies whose shares are traded in the financial market for a period of (7) years.

Second: Muhammad Hefni Mahmoud Thabet:

Imposing a fine of (120,000), preventing him from managing portfolios and working as an investment advisor for a period of (3) years, and preventing him from working in companies whose shares are traded in the financial market for a period of (3) years.

Third: Khalid bin Omar bin Mohsen Al-Kaf: imposing a fine of (600,000) and preventing him from managing portfolios and working as an investment advisor for a period of (7) years, and preventing him from working in companies whose shares are traded in the financial market for a period of (7) years.

Fourth: Thamer bin Muhammad bin Abdullah Al Hosani: Imposing a fine of (600,000), preventing him from managing portfolios and working as an investment advisor for a period of (7) years, and preventing him from working in companies whose shares are traded in the financial market for a period of (7) years.

Fifth: Ahmed Hussein Ali Abdul Nabi: Imposing a fine of $240,000, preventing him from managing portfolios and working as an investment advisor for a period of (5) years, and preventing him from working in companies whose shares are traded in the financial market for a period of (5) years.