The Enforcement of Saudi Securities Fraud Law: A Critical Analysis in Light of the United States and United Kingdom Experiences

Abstract

The enforcement of securities fraud is a significant challenge for governments around the globe. Securities fraud manifested through market manipulation and insider trading is inherently complex, and poses difficulties for legislators, who struggle to provide clear legal definitions of the term, and prosecutors looking to assert criminal liability. Moreover, the rapid evolution of fraudulent market practices, fuelled by the swift advancement of technology, has compelled governments to continually develop enforcement strategies. The determination of whether a violation constitutes civil or criminal liability shapes the basis of civil enforcement and criminal prosecution. Regulatory bodies must be empowered to effectively respond to securities fraud cases through various enforcement mechanisms. Indeed, Saudi Arabia has been progressively modernising its legal system and developing its financial sector through Vision 2030. The US securities fraud regime and its enforcement systems, conducted through the Securities and Exchange Commission (SEC), which was established following the Great Crash of 1929, have considerably influenced and been adapted by other jurisdictions. The 2007–2008 financial crisis spurred more effective responses to securities fraud in both the US and UK. Notably, this thesis is the first academic work to thoroughly examine the enforcement of Saudi securities fraud law. This thesis aims to evaluate the enforcement regime of Saudi securities fraud by drawing lessons from US and UK jurisdictions. This study focuses on addressing the enforcement of market manipulation and insider trading laws. It also discusses the civil and criminal enforcement mechanisms available to regulatory bodies. The extensive experience of the US and UK market frameworks and the influence of their securities law legislation on the drafting of the Saudi Capital Market Law (CML) in 2003 indicate valuable recommendations for reforming the Saudi securities fraud regime and enhancing the enforcement function of the Capital Market Authority (CMA).