ISLAMABAD: Market regulator has filed a criminal complaint
against a senior banker for being involved in possible insider trading, a
statement said on Thursday.
The
Securities and Exchange Commission of Pakistan (SECP) said the case is with the
additional district and sessions judge Karachi south. The statement, however,
did not give any further details.
“Based
on an investigation, the SECP found that he (the banker) had inside information
regarding the bank’s decisions to invest/disinvest (in stocks),” the statement
said. “The bank employee took advantage of the inside information and was
involved in active trading in shares, which was also prohibited under the
employees’ prudential regulations of the bank, making a profit of millions of
rupees.”
The
statement said the SECP has also taken up the issue of bank employees’
involvement in insider trading with the State Bank of Pakistan for appropriate
measures and issuance of policy guidelines.
Meanwhile,
the SECP chairman Zafar Hijazi has expressed the regulator’s firm resolve to
take strict action against brokerage houses and those found involved in
malpractices and misuse of client assets.
“…
the SECP is actively coordinating with law enforcement agencies, including NAB
(National Accountability Bureau) to apprehend the culprits involved in
misappropriation of investor assets in a timely and efficient manner,’ said a separate
statement of SECP, quoting its chairman.
The
statement said the SECP shared its investigation on illegal activities of
raising deposits from the public/investors against promise of fixed rate of
return under the umbrella of stock market investments by a few brokers with
some of the leading brokerage houses.
The
SECP and the brokerage houses agreed that the said activities of brokers were
illegal and tantamount to defrauding the public. It was also emphasised that
the investors and the public should be cautious of such illegal activities, and
should not engage or be a party to any illegal investment activities.
The
investors/general public should not give deposit to any broker, as it was
illegal and any claim in respect of such illegal deposit would not be
considered by the stock exchange, as it was beyond the scope of legitimate
capital market activities.
Hijazi
also urged to form a broker association with countrywide representation for
self-regulation. It was agreed that a broker association would be formed, which
would graduate into a SRO and play its due role.
The
consultative group decided to not allow single-member companies to obtain a
brokerage license due to dependency on one person and weak board structure.
It
was agreed that strict checks and balances should be maintained for opening
branch offices, allowing only licensed activities with mandatory rating of such
brokers from credit rating
agencies.
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