Following a brief suspension of trading of Saudi Arabian telecoms operator Etihad Etisalat’s (Mobily’s) shares in order to ‘give the company time to announce a clarification related to one of its businesses’, the Capital Market Authority (CMA) has referred a case of suspected insider trading at the telco to public prosecutors.
As previously reported by CommsUpdate, in November 2014 the CMA launched an investigation into Mobily after the company restated its earnings for an 18 month period due to ‘accounting error’. In March 2015 the CMA assigned a specialised team to review Mobily’s newly restated financial statements and all other related documents, following an investigation to determine any violations by the company towards the bourse rules. The market regulator revealed that it suspects Mobily of breaching Articles (49) and (50) of the Capital Market Law (CML) and section C of Article (42) of the Listing Rules. Article 49 of the CML prohibits several activities, including: creating ‘a false or misleading impression’ relating to the price or value of a stock, trading securities that do not involve a true transfer of ownership, trading a stock to induce third parties to do likewise and buying or selling a stock to stabilise its price, while the second clause prohibits trading on inside information not publicly available and that which the insider knows ‘would have a material effect on the price or value of such a security’. Section C of Article (42) meanwhile states that once a company’s directors approve its financial results, these must not be revealed to shareholders or third parties prior to official release.
In related news, Mobily has announced that it is currently studying the possibility of selling its mobile towers. The company however highlighted that ‘it has not entered into any agreement in that regard, nor determined the financial impact thereof’. As previously reported by CommsUpdate, in February 2015 Mobily was said to have issued a tender for advisory services to look at strategic options for the operator’s towers portfolio, according to unnamed people familiar with the matter, with bids understood to have been submitted that month.