The role of legal enforcement measures in managing financial market risks: A comparative analysis of public and private approaches in Saudi Arabia

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Abstract

The inefficiency of financial markets’ regulatory frameworks has been identified as one of the threats to the stability and prosperity of emerging markets worldwide (Sheng, 2010). This study evaluates the effectiveness of the current legal enforcement framework in the Saudi financial market and its role in managing financial risks and protecting investors. As the Saudi capital market employs a mixed system of public and private enforcement, this research examined enforcement actions by the Capital Market Authority (CMA) and related civil litigation between 2020 and 2024. A multimethod approach was used, combining qualitative analysis of the literature with quantitative data on civil and enforcement actions published by the CMA. The findings indicate that, although private enforcement largely supplements the more prevalent public mechanisms, it remains essential to the strong legal safeguards provided by the Saudi Capital Market Law. The study identifies several implementation challenges that may limit the effectiveness of private enforcement in promoting market efficiency and offers Saudi lawmakers useful insights into regulatory measures that can significantly manage financial risks and combat capital market breaches. Such efforts will enhance the complementary relationship between public and private enforcement in Saudi Arabia.

Keywords: Private Enforcement, Public Enforcement, Investor Protection, Saudi Stock Market, Capital Market Authority (CMA), Corporate Fraud

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G1, K2, G280, K220

Received: 01.07.2025
Revised: 19.09.2025; 25.10.2025
Accepted: 03.11.2025
Published online: 05.11.2025

How to cite this paper: Al Dossari, A. F. (2025). The role of legal enforcement measures in managing financial market risks: A comparative analysis of public and private approaches in Saudi Arabia. Risk Governance and Control: Financial Markets & Institutions, 15(4), 76–84. https://doi.org/10.22495/rgcv15i4p7