KARACHI: Sindh Special Court (Offences in Banks) handed out the first-ever conviction for insider trading in a case filed by the Securities and Exchange Commission of Pakistan (SECP), the commission said in a press release on Tuesday.
The court convicted Zakir Hussain Somji of insider trading in violation of Section 128 of the Securities Act, 2015.Chairperson of the SECP Akif Saeed applauded the legal team, adding that the judgment will boost investor confidence in Pakistan’s capital markets and, in turn, facilitate capital formation. He also expressed hope that the ruling will set a precedent for pending cases and ongoing inquiries into insider trading and market manipulation.
The case originated from the SECP’s inspection of suspicious trading activity identified through analysis of Karachi Automated Trading System (KATS) data from January 1, 2014 to February 2, 2016. It was suspected that the accused, by virtue of his position at a financial institution, misused insider information for personal gain.
An investigation revealed that the accused purchased 11,795,100 shares of various companies. Through a small fraction of his investment (10.43 per cent), he earned an unlawful profit of Rs2,866,646.
Following the investigation, the SECP filed a formal complaint under Section 128, punishable under Section 159 of the Securities Act, 2015. After a full trial and hearing arguments from the SECP’s Special Public Prosecutors and the defence, the Special Court delivered its judgment on June 14.
The court imposed a penalty of Rs8,599,938 -- three times the unlawful gain. The amount is to be deposited within seven days, failing which the convict will be remanded to jail until full payment is made.