Saudi's Al-Khudairy family touted a capital raise, sold next day, paid SAR 101.7M

On 5 June 2018 Abdullah A.M. Al-Khudairy Sons Co., a family-controlled construction group on Tadawul, announced that its board had raised the cap on a capital increase to SAR 257M from SAR 208M, with new shares granted against debts owed to the parent holding company. The disclosure framed the parent's push to raise its stake as 'a positive and strong indicator' of its desire to provide strategic support. The stock rose over the following two days.

On 6 and 7 June 2018, the portfolio of the holding company sold 2.18 million Al-Khudairy shares. Years later the CMA's Appeal Committee for Securities Disputes found Fawaz Al-Khudairy had issued the statement to influence the price and induce buying, inconsistent with the announced aim of supporting the company. It also convicted him of concealing material developments — the withdrawal of several projects between May 2017 and January 2020 — and, with Jamil and Ali Al-Khudairy, of passing inside information about the company's finances and possible bankruptcy to others.

In its final decision reported in June 2024, the committee convicted ten investors — eight Al-Khudairy family members and two Al-Ali in-laws — and ordered them, together with another family investor, to pay SAR 101.7M: SAR 670,000 in fines and about SAR 101M of avoided losses disgorged from their portfolios. Fawaz Al-Khudairy received six months in prison; others such as Mishaal Al-Khudairy paid SAR 11.04M of avoided losses and year-long bans from working in listed companies. By March 2021 the listed company itself had filed at the Dammam Commercial Court to extend its financial restructuring.

SAR 101.7M: SAR 670K of fines plus SAR 101M of avoided-loss disgorgement, stock-market bans, and six months in prison for Fawaz Al-Khudairy

The disclosure billed a debt-for-equity increase as outside support arriving, while the group's own portfolio used the price jump to exit; the two-day gap became the regulator's central evidence.

Framing a related-party debt settlement as a 'strong indicator' of support dressed up a balance-sheet workaround as a market signal, which the committee read as a statement made to move the price.

The family treated inside knowledge of project cancellations and bankruptcy risk as private; sharing it with relatives turned a solvency problem into a market-abuse case with prison exposure.

Avoided-loss disgorgement claws back losses investors dodged by trading on the wrong side of the truth; it reached SAR 101M — far beyond the fines — because every family portfolio was traced.

A controlling family cannot talk a stock up with one hand and sell with the other: regulators read the gap between what a disclosure promises and what insiders do next as the true statement.

The Appeal Committee's decision is final: SAR 101.7M in fines and disgorged avoided losses, one-year industry bans, and a six-month prison term for Fawaz Al-Khudairy. The listed company never recovered the story it told in 2018 — it entered court-supervised financial restructuring, asking the Dammam Commercial Court in March 2021 for a 30-day extension to submit its restructuring proposal while still preparing its 2018-2020 financial statements.