(Recasts with Mobily statement)

By Matt Smith

DUBAI, Oct 11 (Reuters) - Saudi Arabia's market regulator has rejected demands made by some shareholders in telecoms operator Mobily 7030.SE for compensation for the steep drop in its stock price, the company said on Sunday.

Mobily's announcement comes after the Capital Market Authority (CMA) earlier on Sunday suspended the company's shares pending its response to the preliminary decisions of the regulator's Committees for the Resolution of Securities Disputes. ID:nL8N12B07R

The CMA did not say what these findings were, but Mobily said in a subsequent bourse filing that the committee had rejected investors' demands for compensation for losses suffered as a result of its financial statements.

Mobily, part-owned by Abu Dhabi-listed Etisalat ETEL.AD , was once a favourite of retail and institutional investors as it posted record earnings year after year and paid generous dividends, but the operator's shares are down 63 percent since last November when it restated some of its previously announced profits. ID:nL5N10A4V4

It subsequently made further adjustments to its earnings, eventually restating 27 months of earnings to March 31, 2015, which cut its total profits over the period by about 1.76 billion riyals ($470 million).

Mobily said it was obliged to publish its original results once approved by its board, in accordance with Saudi sharelisting rules. As such the committee had found no proof "of any violation by Mobily of its statutory obligations", its statement on Sunday said.

The company had attributed its problems to the premature booking of revenues from wholesale broadband leases and mobile promotional campaigns and said it had also made further changes to the way it accounts for some contracts and the depreciation of property and equipment.

In May the CMA referred a case of suspected insider trading at Mobily to public prosecutors. The regulator's investigation centred on a suspicion that the company might have breached one of its market listing rules and two articles of the Capital Market Law, including provisions against insider trading. ID:nL5N0Y44OB

"Mobily will announce any material developments to the company," its statement on Sunday said in reference to the case brought by disgruntled investors and other lawsuits.

(With additional reporting by Marwa Rashad; Editing by Greg Mahlich) ((matt.smith1@thomsonreuters.com; 00971506354039; Reuters Messaging: matt.smith1.thomsonreuters.com@reuters.net))

Keywords: MOBILY STOCKS