Saudi Arabia’s financial regulator has accepted a request to register a class action lawsuit against members of Saudi Arabia's Dammam-based contractor Mohammad Al-Mojil Group (MMG), in relation to the group's 2008 initial public offering (IPO) on the kingdom's bourse, Tadawul.
According an official statement, the General Secretariat of Committees Resolution of Securities (GS-CRSD) – part of the kingdom’s Capital Market Authority (CMA) – said it had agreed to class action after “a number of joining requests that share the same legal bases, merits, and subject matter of the claims [...] reached the specified threshold to issue an approval of the class action suit”.
The decision comes nearly three years after an initial CRSD decision in June 2016 to impose prison terms on three of MMG’s members, including founder Mohammad Al-Mojil and his son Adel Al-Mojil.
February 2017 saw CMA name nine defendents, including accountancy firm Deloitte, for ‘illegal profits’ and other irregularities during MMG’s IPO in 2008.
According to a report by Arab News at the time, penalties included a sanction of $432m (SAR1.62bn) against former chairman of MMG’s board, Mohammed bin Hamad Al-Mojil, alondside a five-year prison term, a separate $80,000 (SAR300,000) fine, and a ban from working in listed companies for 10 years.
The firm’s legal troubles largely began after founder Mohammad Al-Mojil took the decision to sell a 30% stake in the contractor through the firm’s 2008 IPO.
IN DEPTH: THE MMG STORY EXPLAINED
Then, on 22 July, 2012, it emerged that the firm had incurred significant losses, and the CMA suspended trading of MMG shares on Tadawul.
GC-CSRD said anyone that purchased or subscribed to MMG shares before the firm published its first financial statements on 12, July, 2008 – and those that have faced damages by these violations – have the right to submit a request to the CRSD to join the class action suit.