(MENAFN – Arab News) The Capital Market Authority (CMA) has issued a new guide aimed at enhancing awareness among real and potential investors in the stock market by introducing more cases considered to be in violation of capital market regulations, the Saudi press agency reported.
According to the new guidelines, an investor could be considered a violator if he buys or sells a quantity of shares immediately before the end of trading session in order to influence the closing price of shares whereby the share price will be closed at an “artificial” price based on false information about the market performance and investment portfolios.
Based on this conduct, investors may take wrong investment decisions that will, in turn, affect the price of shares at the start of trading following day, the CMA guide says.
According to the guide, an investor considered a violator if he raises the price of shares and immediately sells them, or if he enters purchase orders that will make price of share rise to an “artificial” level thus leading investors to believe that there is increasing demand on that share whereby they take wrong investment decisions.
A manipulative investor might benefit from this situation by selling his shares or shares of another investor, the guide said.
Other cases of violation would include a group of investors, who may co-ordinate their purchase orders aimed at influencing share prices by raising them an artificial level, which do not reflect the real price. This situation may lead other investors to take wrong investment decisions and, whereby, such group of investors might sell all or part of their shares, taking advantage of the changes in the share price.
Trading based on inside information is also prohibited, the guide stressed. It gives an example of an employee or a board director who buys shares of the company or discloses information to another person on the news that the firm will be a target for acquisition by another one, a conduct that does not realize justice in capital market.