Shearman-associated Saudi lawyer fined for market manipulation

A lawyer working within Shearman & Sterling’s associated office in Saudi Arabia has been fined £103,000 by the Capital Market Authority for market manipulation.

Abdulaziz Alassaf, a named partner at Abdulaziz Alassaf & Partners, was fined 560,000 riyals (£103,000) for manipulating the market after he and seven of his brothers sold a substantial amount of shares between December 2008 and October 2009. The shares were spread across 10 companies mostly specialising in the insurance sector.

Last year the Capital Market Authority successfully sued the Alassaf family who hoped to appeal the decision. The Appeal Committee for the Resolution of Securities Disputes in Saudi Arabia has since upheld the decision and fined the brothers a total of 3.94m riyals (£723,000).

Alassaf was also forced to hand over all of the gains made from these transactions to the Capital Market Authority, which totalled 12.7m riyals (£2.3m). Combined the eight brothers repaid 39.7m riyals (£7.3m).

The shares were in a number of companies mostly operating in the insurance market. The companies were: Tourism Enterprise, Alahli Takaful, SABB Takaful, Saudi United Cooperative Insurance, Alkhaleej Training and Education, Saudi Industrial Export, Al-Ahlia Insurance, AXA Cooperative Insurance, Weqaya Takaful Insurance and Reinsurance, and Arabian Shield Cooperative Insurance.

The committee’s decision also prohibits Alassaf and his brothers from buying shares in listed companies, working as investment consultants and working in listed companies for three years.

The committee ruled that Alassaf had violated article 49 of Saudi Arabia’s Capital Market Law as well as Articles two and three of the Market Conduct Regulations. These articles outline what activities will be deemed as market manipulation and include selling shares “with prior knowledge that an order or orders of substantially the same size, price and timing for the purchase of the same security has been or will be entered by the same party or different parties”.

Shearman partnered with Abdulaziz Alassaf & Partners last year in an attempt to increase its presence across the Middle East. The relationship gave the US-founded firm the ability to operate in Riyadh, Jeddah and Al-Khobar. Although Alassaf was the founder the firm it is currently led by Sultan Almasoud and Sanjarbek Abdukhalilov.

A Shearman spokesperson said: “Abdulaziz Alassaf has not been active in the practice of law since 2000, and Abdulaziz Alassaf & Partners have confirmed that he will be officially retiring from their firm, effective immediately. The CMA’s ruling does not involve the law firm of Abdulaziz Alassaf & Partners or any other members of Abdulaziz Alassaf & Partners.”

Abdulaziz Alassaf & Partners includes both Saudi and English-qualified lawyers and specialise in providing advice on corporate issues, private equity and dispute resolution.

White & Case recently announced it had established a new association in Saudi Arabia with the Law Firm of AlSalloum and AlToaimi. The association was created after The Lawyer revealed that White & Case had ended its five-year association with Waleed Al-Nuwaiser in December.