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