• MIE-3.6 MIE-3.6 Enforcement Measures and Actions

    • MIE-3.6.1

      As it is neither practical nor effective to prescribe in detail the exact enforcement measures for each and every type of potential non-compliance or violation, the CBB will consistently apply the principles stated in paragraph MIE-3.1.4 to assess the individual circumstance of each contravention and decide on the appropriate type or types of enforcement actions that may be resorted to in respect of each case.

    • MIE-3.6.2

      The type of enforcement actions, both interim and final, that can be applied on different categories of persons involved could include but not be limited to the enforcement actions and measures specified in paragraphs MIE-3.6.3 to MIE-3.6.9.

    • Members of SROs and other Capital Market Service Providers

      • MIE-3.6.3

        Enforcement actions in respect of the members of SROs and other capital market service providers will mainly be governed by the CBB Law and the relevant volume of the CBB Rulebook and enforcement actions thereunder include:

        1) Formal warnings;
        2) [This Subparagraph was deleted in July 2021].
        3) Financial penalties as per Article 129 of the CBB Law;
        4) Placing a licensee under administration as per Article 136 of the CBB Law;
        5) Cancellation or amendment of license as per Article 48 of the CBB Law;
        6) Taking enforcement action(s) directly against Approved Persons under Article 65 of the CBB Law;
        7) Criminal sanctions under Articles 163, 169, 170 and 171 of the CBB Law.

        In addition to the above, the CBB may also resort to the following enforcement actions under the CBB Law:

        (a)
        i. Cease and Desist Order

        An order prohibiting members of SROs or other capital market service providers from continuing an activity. Cease and desist orders can be used as an emergency measure to prevent possible or potential irreparable harm as an interim and temporary injunction, or it can also be used as the outcome of the final investigation and/or enforcement proceedings as a permanent injunction.
        ii. Freezing Accounts

        An order restricting a securities or securities cash account of a member of an SRO or other capital market service provider with the licensed exchanges, clearing houses, central depositories, banks, brokerage firms, etc. This measure generally will be used as an interim measure.
        iii. This Subparagraph was deleted in July 2021].
        iv. Private Warnings

        In certain cases despite concerns about a person's conduct or evidence of a breach, the CBB may decide that it is not appropriate, having regard to all the circumstances of the case, to bring formal action for a financial penalty or public censure. This is consistent with the CBB's risk-based approach to enforcement. In such cases, the CBB may give a private warning to make the person aware that they came close to being subject to formal action. Typically, the CBB might give a private warning rather than take formal action where the matter giving cause for concern is minor in nature or degree, or where the person has taken full and immediate remedial action. But there can be no exhaustive list of the conduct or the circumstances which are likely to lead to a private warning rather than more serious action. The CBB will take into account all the circumstances of the case before deciding whether a private warning is appropriate.
        (b) Amendment or Revocation of License Under Article 48

        The CBB may amend or revoke a license of a member of an SRO or other capital market service provider, for contravention of the CBB Law, rules and regulations and the terms and conditions of a license.
        (c) Imposing Restrictions under Article 128

        The CBB may impose administrative restrictions upon members of SROs or other capital market service providers, in order to secure the compliance with the CBB Law, rules and regulations and the terms and conditions of a license.
        (d) Imposing Financial Penalties under Article 129 of the CBB Law

        The CBB may impose financial penalties as an enforcement action for contravention of the CBB Law, rules and regulations and the terms and conditions of a license.
        (e) Appointing an Observer Member on the Board of the Licensee under Article 130

        If imposing administrative restrictions prove to be futile, then the CBB may appoint an observer member on the Board of Directors of the member of an SRO or other capital market service provider, for a specified period.
        (f) Suspension of a Licensee under Article 131

        The CBB may suspend a member of an SRO or other capital market service provider, who contravenes the provisions of the CBB Law, rules and regulations and terms and conditions of a license for a period not exceeding 12 months.
        (g) Public Censure under Article 132

        The CBB may issue a public statement on breach of the provision of the CBB Law, rules and regulations and terms and conditions of a license.
        (h) Criminal Sanction under Article 166

        The CBB may initiate proceedings for imposing criminal sanctions in respect of offences which result in the violation of Articles 81 or 85 of the CBB Law, if members of SROs or other capital market service providers, are involved in such violations.
        (i) Criminal Sanction under Article 167

        The CBB may initiate proceedings for imposing criminal sanctions in respect of market manipulation offences which result in the violation of Article 100 of the CBB Law; i.e. abuse of inside information.
        (j) Criminal Sanction under Article 168

        Article 168 of the CBB Law states that "Without prejudice to any greater penalty prescribed under the Penal Code or any other law, a person who contravenes Article (106) of this law is guilty of an offence of market manipulation and shall be liable to imprisonment for a term not exceeding six months and a fine not exceeding Bahraini Dinars ten thousand (10,000) or either penalty."
        (k) Criminal Sanction under Article 169

        Article 169 of the CBB Law states that "Without prejudice to any greater penalty stated under the Penal Code or any other law, a punishment by imprisonment and a fine not exceeding twenty thousand (20,000) Bahraini Dinars, or by either penalty, shall be imposed upon any official or employee of the licensee who acts or permitted an action in violation of Article (134) of this Decree, if he knows or should have known that the licensee is insolvent".
        (l) Criminal Sanction under Article 170

        Article 170 of the CBB Law states that "Without prejudice to any greater penalty prescribed under the Penal Code or any other law: (1) A person shall be liable to imprisonment for a term not exceeding five years and a fine not exceeding twenty thousand (20,000) Bahraini Dinars, or by either penalty, if he falsifies, conceals, destroys or otherwise disposes of a document which he knows or he should know that such document is relevant or shall be of relevance to a current investigation or an investigation likely to be conducted in accordance with Chapter (1) of Part 9 of this Law. Any person participates in such an offence shall be liable to the same penalty of the principal offender. (2) A person shall be liable to imprisonment for a term not exceeding three months, or a fine not exceeding three thousand (3,000) Bahraini Dinars, or either penalty, if he intentionally obstructed any investigation carried out by the Central Bank or an investigator appointed by the Central Bank."
        (m) Criminal Sanction under Article 171

        Article 171 of the CBB Law states that "Without prejudice to any greater penalty prescribed under the Penal Code or any other law, a person who discloses in bad faith any Confidential Information in contravention of the provisions of Part (8), shall be liable to imprisonment and a fine not exceeding Bahraini Dinars ten thousand (10,000), or either penalty." This criminal sanction is applicable to members of SROs or other capital market service providers who violate Part 8 of the CBB Law.
        (n) Criminal Sanction under Article 172

        Article 172 of the CBB Law states that "Any legal person shall be liable and punished under criminal law by a fine not exceeding two hundred thousand Bahraini Dinars, if any of the crimes stated in this Decree are committed in the name or for his account or by means of any of his facilities, and this was a result of any action or gross negligence or by the approval or under covering of any member of the board of directors or any other official of that legal person or any person who acts in such capacity."
        (o) Criminal Sanction under Article 163

        Article 163 of the CBB Law states that "Without prejudice to any greater penalty prescribed under the Penal Code or any other law, any officer or employee of a licensee or a listed company shall be punished by imprisonment and a fine not exceeding twenty thousand (20,000) Bahraini Dinars, or by either penalty, if he: (1) Concealed any records, information or documents relevant to the activities of the licensee, requested by the Central Bank or any person appointed by the Central Bank to conduct an investigation or inspection on the business of the licensee or the listed company, or provides any of them, in a bad faith, with statements or information which proves to be false or misleading or do not reflect the actual financial position of the licensee or the listed company. (2) Concealed from the external auditor any records, information or documents necessary for auditing the accounts of the licensee or the listed company, or provides him in a bad faith, with misleading or inaccurate statements or information which do not reflect the actual financial position of the licensee or the listed company."
        (p) [This Subparagraph was deleted in July 2021].
        Amended: July 2021

    • Disciplinary Action through Licensed Exchanges and Licensed Clearing Houses/Central Depositories (SROs)

      • MIE-3.6.4

        SROs are required to establish a Disciplinary Committee for the purpose of deciding violations by the members or listed companies, or issuers of SRO's business rules. A Disciplinary Committee shall decide on cases relating to any violation of laws, rules and regulations which regulate the licensed exchanges. Enforcement measures that can be imposed on members of SROs and listed companies/issuers through the Disciplinary Committee of licensed exchanges may include:

        i. Warning;
        ii. Confiscation of all or part of the member's deposits with the licensed exchange;
        iii. Suspension of trading or clearing rights;
        iv. Suspension of membership rights;
        v. Cancellation of membership;
        vi. Financial penalties, fines and charges.

        The CMSD may advise licensed exchanges, licensed clearing houses and central depositories within their scope of their respective powers, to take appropriate enforcement actions. These actions can be in addition to other enforcement actions which are taken by the CBB itself.

    • Listed Companies

      • MIE-3.6.5

        Listed companies are required to meet their obligations as per the CBB Law, rules and regulations and these obligations include the dissemination of information, filing of returns, notifications and periodic reports. For example, listed companies are required to monitor insiders' transactions and report to the CMSD regarding any suspected case of abuse of inside information and file reports regarding insiders' transactions. If a listed company or an issuer fails to comply with or contravenes the CBB Law, rules and regulations, or any other applicable laws, rules and regulations, the CBB may initiate appropriate enforcement actions. Such enforcement actions may include, but not be limited to:

        (a)
        i. Formal warning:

        An order issuing a formal warning may be issued to a listed company in order to clearly set out the CBB's concerns to a listed company to ensure that the matter is viewed by the recipient with appropriate seriousness.
        ii. Cease and Desist Order:

        An order prohibiting a listed company from continuing an activity. Cease and desist orders can be used as an emergency measure to prevent possible or potential irreparable harm as an interim and temporary injunction, or it can also be used as the outcome of the final investigation and/or enforcement proceedings as a permanent injunction.
        iii. [This Subparagraph was deleted in July 2021].
        iv. Private Warnings

        In certain cases despite concerns about a person's behaviour or evidence of a breach, the CBB may decide that it is not appropriate, having regard to all the circumstances of the case, to bring formal action for a financial penalty or public censure. This is consistent with the CBB's risk-based approach to enforcement. In such cases, the CBB may give a private warning to make the person aware that they came close to being subject to formal action. Typically, the CBB might give a private warning rather than take formal action where the matter giving cause for concern is minor in nature or degree, or where the person has taken full and immediate remedial action. But there can be no exhaustive list of the conduct or the circumstances which are likely to head to a private warning rather than more serious action. The CBB will take into account all the circumstances of the case before deciding whether a private warning is appropriate.
        (b) Restraining offering of securities using powers under Article 81:

        The CBB may direct a listed company or any other prospective issuer not to access the market for an offer or issue of securities in the Kingdom for a certain period or until certain conditions are satisfied.
        (c) Cancellation of listing and suspension of trading:

        Article 87 (a) of the CBB Law states that: "The Central Bank may decide to cancel the listing of any securities that contravene the requirements of the Listing Rules, or to suspend the trading of any listed securities facing exceptional circumstances that the Central Bank considers as sufficient grounds for the suspension of the securities.

        The cancellation of listing or the suspension of trading shall be decided by the Governor."
        (d) Imposing restrictions under Article 128

        The CBB may impose administrative restrictions upon listed companies in order to secure the compliance with the CBB Law, rules and regulations and the terms and conditions of a license.
        (e) Public censure under Article 132

        The CBB may issue a public statement on breach of the provision of the CBB Law, rules and regulations and terms and conditions of a license.
        (f) Criminal sanction under Article 163

        Article 163 of the CBB Law states that "Without prejudice to any greater penalty prescribed under the Penal Code or any other law, any officer or employee of a licensee or a listed company shall be punished by imprisonment and a fine not exceeding twenty thousand (20,000) Bahraini Dinars, or by either penalty, if he: (1) Concealed any records, information or documents relevant to the activities of the licensee, requested by the Central Bank or any person appointed by the Central Bank to conduct an investigation or inspection on the business of the licensee or the listed company, or provides any of them, in a bad faith, with statements or information which proves to be false or misleading or do not reflect the actual financial position of the licensee or the listed company. (2) Concealed from the external auditor any records, information or documents necessary for auditing the accounts of the licensee or the listed company, or provides him in a bad faith, with misleading or inaccurate statements or information which do not reflect the actual financial position of the licensee or the listed company."
        (g) Criminal Sanction under Article 166

        The CBB may initiate proceedings for imposing criminal sanctions in respect of violation of Articles 81 or 85 of the CBB Law.
        (h) Criminal Sanction under Article 167

        The CBB may initiate proceedings for imposing criminal sanctions in respect of market manipulation offences which result in the violation of Article 100 of the CBB Law; i.e. abuse of inside information.
        (i) Criminal Sanction under Article 168

        Article 168 of the CBB Law states that "Without prejudice to any greater penalty prescribed under the Penal Code or any other law, a person who contravenes Article (106) of this law is guilty of an offence of market manipulation and shall be liable to imprisonment for a term not exceeding six months and a fine not exceeding Bahraini Dinars ten thousand (10,000) or either penalty."
        (j) Criminal Sanction under Article 170

        Article 170 of the CBB Law states that "Without prejudice to any greater penalty prescribed under the Penal Code or any other law:
        (1) A person shall be liable to imprisonment for a term not exceeding five years and a fine not exceeding twenty thousand (20,000) Bahraini Dinars, or by either penalty, if he falsifies, conceals, destroys or otherwise disposes of a document which he knows or he should know that such document is relevant or shall be of relevance to a current investigation or an investigation likely to be conducted in accordance with Chapter (1) of Part 9 of this Law. Any person participates in such an offence shall be liable to the same penalty of the principal offender.
        (2) A person shall be liable to imprisonment for a term not exceeding three months, or a fine not exceeding three thousand (3,000) Bahraini Dinars, or either penalty, if he intentionally obstructed any investigation carried out by the Central Bank or an investigator appointed by the Central Bank."
        (k) Criminal Sanction under Article 172

        Article 172 of the CBB Law states that "Any legal person shall be liable and punished under criminal law by a fine not exceeding two hundred thousand Bahraini Dinars, if any of the crimes stated in this Decree are committed in the name or for his account or by means of any of his facilities, and this was a result of any action or gross negligence or by the approval or under covering of any member of the board of directors or any other official of that legal person or any person who acts in such capacity."
        (l) Imposing Financial Penalties under Article 129 of the CBB Law

        The CBB may impose financial penalties as an enforcement action for contravention of the CBB Law, rules and regulations.
        Amended: July 2021

    • Licensed Exchanges, Clearing Houses and Central Depositories

      • MIE-3.6.6

        As an SRO, the licensed exchanges, clearing houses and depositories are required to:

        a) Actively perform market surveillance as a front-line regulator;
        b) Take disciplinary action for contraventions by members and listed companies/issuers through the SRO's Disciplinary Action Committee;
        c) Identify potential cases of unlawful transactions and take preventative actions;
        d) Report suspected cases of market abuse and manipulation to the CBB;
        e) Implement enforcement actions determined by the CBB.

        When an SRO contravenes the provisions of the CBB Law, rules and regulations, as CBB licensees, the enforcement action applicable to all other capital market service providers of the CBB will also be applicable to the licensed exchanges, clearing houses and central depositories. In addition to these enforcement actions, these SROs will be subject to other enforcement actions stated in the Markets & Exchanges Module and the Clearing, Settlement & Central Depository Module. Such enforcement measures include:

        a) Cancellation or amendment of license;
        b) [This Subparagraph has been deleted in July 2021];
        c) Removal of officers from his office or employment;
        d) Financial penalties as per Article 129 of the CBB Law.
        Amended: July 2021

    • Users of Capital Market Service Providers and Persons other than Licensees and Listed Companies

      • MIE-3.6.7

        Users of capital market service providers and other persons who are neither licensees nor listed companies must also not engage in conduct that would cause harm to capital markets or that would contravene the CBB Law, its regulations, resolutions or directives, or any other applicable laws relating to capital markets.

        (a) [This Subparagraph has been deleted in July 2021].
        (b) [This Subparagraph has been deleted in July 2021].
        (c) [This Subparagraph has been deleted in July 2021].
        Where the CBB discovers, suspects or identifies such conduct, it may take the following actions or measures:
        i. Warning:

        A warning may be sent to relevant persons clearly setting out the CBB's concerns and requesting them to stop or cease the particular conduct.
        In certain cases, despite concerns about the behaviour or evidence of a breach, the CBB may decide that it is not appropriate, having regard to all the circumstances of the case, to take formal action. This is consistent with the CBB’s risk-based approach. The purpose of the warning is to make the relevant persons aware of the issue and to permit the taking of full and immediate remedial action.
        ii. [This Subparagraph has been deleted in July 2021].
        iii. Restricting Accounts/Activities:

        Instructing licensed exchanges, clearing houses, central depositories, brokerage firms, etc. to restrict the accounts of relevant persons who fail to comply with the laws, regulations and rules relating to capital markets or to restrict such persons from conducting transactions or engaging in activities that are relevant to the accounts.
        iv. [This Subparagraph has been deleted in July 2021].
        v. [This Subparagraph has been deleted in July 2021].
        iv. [This Subparagraph has been deleted in July 2021].
        In addition to the above, the CBB may initiate proceedings as follows:
        (b) Criminal Sanction under Article 166

        The CBB may initiate proceedings for imposing criminal sanctions in respect of offences which result in the violation of Articles 81 or 85 of the CBB Law relating to issuing securities and preparing prospectuses.
        (c) Criminal Sanction under Article 167

        The CBB may initiate proceedings for imposing criminal sanctions in respect of insider trading offences which result in the violation of Article 100 of the CBB Law.
        (d) Criminal Sanction under Article 168

        The CBB may initiate proceedings for imposing criminal sanctions in respect of market manipulation offences that result in a violation of Article 106 of the CBB Law.
        (e) Criminal Sanction under Article 170

        The CBB may initiate proceedings for imposing criminal sanctions in respect of any forging, concealing or destroying of any document relating to a current investigation or an investigation likely to be conducted in accordance with Chapter (1) of Part 9 of the CBB Law.
        (f) Criminal Sanction under Article 171

        The CBB may initiate proceedings in relation to Article 171 of the CBB Law concerning any person who discloses in bad faith any Confidential Information in contravention of the provisions of Part (8) of the CBB Law.
        (g) Criminal Sanction under Article 172

        The CBB may initiate proceedings in relation to Article 172 of the CBB Law concerning any legal person, where any of the crimes stated in the CBB Law were committed in its name or for its account or by means of any of its methods and which resulted from the action or gross negligence or approval or under the cover of any member of the board of directors or management or any other official of that legal person or any person who acts in such capacity.
        (h) [This Subparagraph has been deleted in July 2021].
        (i) [This Subparagraph has been deleted in July 2021].
        Amended: July 2021

    • Restriction of Capital Market Service Providers, Auditors and Other Experts

      • MIE-3.6.8

        The CBB may in respect of auditors of CBB licensees, listed companies, issuers of securities or any other market participant, restrict the duties of such auditors and other experts, where the auditors and other experts failed to perform their duties specified under the CBB Law, rules and regulations. Any decision of the CBB in this regard may apply for a specified period or indefinite period until the CBB is satisfied that the person will in future comply with the duties and responsibilities in question.

      • MIE-3.6.9

        The CBB may also restrict the activities that may be undertaken by capital market service providers, lead managers, share registrars, underwriters and other professionals involved in capital market activities.