REGULATIONS AGAINST FRAUD IN STOCK EXCHANGES, A COMPARITIVE STUDY BETWEEN SAUDI ARABIA AND USA

The Saudi Arabian stock market faced a crisis in February 2006, when the index collapsed by around 50%. The collapse was questioned both by academics and in the media, as there was no obvious reason for it. As a result, the researcher became interested in examining the regulations against fraud in the stock market. This research empirically examines, by interviews and questionnaire, the Saudi stock market regulations against fraud. In addition, the Capital Market Law of Saudi Arabia is compared in some parts of the research with the securities regulations in the United States. The empirical results show that although regulations against fraud exist, the issue is their implementation. Furthermore, the sample of the study shows that investors’ financial awareness is still insufficient to allow them to make their investment choices on a solid financial basis.