ISLAMABAD: As the stock exchange was being ruled by bulls and bears, one of the senior members of the ISE has looted at least 1,200 investors of over Rs1 billion just last week when the investors came to know that the broker had been issuing fake share certificates to them for years and now he has defaulted.
Security and Exchange Commission of Pakistan (SECP) Chairman Zafar Hijazi while talking to The News confirmed the fraud and said they were investigating the issue and would soon bring the facts before the investors. He said so far the investors had registered Rs160 million claims against the brokerage house.
However, according to the investors, more than 1200 investors invested more than Rs1 billion in the stock market through this brokerage house. According to these investors, only 20 percent of the total investors have registered their claims as majority of them is still unaware of this fraud.
According to an insider in the Pakistan Stock Exchange, the owner of the brokerage house who was previously a member of Islamabad Stock Exchange therefore he knew the loopholes in the present system of the stock market. The broker hardly used sub-accounts for trading rather most of the trading was done through its main account with CDC.
The source further said that it was further shocking that he had even encashed all the shares from the main account too, which were purchased on behalf of the investors. The broker was maintaining two separate parallel ledgers and software. He used to issue fictitious statements of daily trading and holding to the investors whenever demanded under the signature of his manager. However, very few shares were actually traded from main board and those too through his main account with CDC.
This brokerage house has over 1200 investors registered with him and apparently the liability he owns towards the investors is over Rs1 billion. The investors approached the CDC to check their sub accounts where it revealed that they had nothing left in their accounts, the source informed.
Mr Iqbal, one of the investors, who invested Rs12 million through this brokerage while talking to The News said, “It is shocking news for most of us that in the presence of all the regulators and rules, a big, renowned brokerage house M/S A W J Securities (Pvt) Ltd had defaulted. This brokerage house was being run under a private limited company with most of the directors from one family”.
According to Mr Iqbal, the stock exchange administration has stopped its trading now. However the owner has shown inability to return the shares to the investors saying that he has nothing in his hand now. He further alleges his own employees to manipulate the accounts.
The investors, mostly old age people including widows and pensioners have invested their life-time savings in the stock market, are now running pillar to post in search of their holdings.
Mr Ali, another investor while talking to The News said that he was a retired officer from one of the ministries of the federal government. He invested Rs3 million in the stock exchange through this brokerage house but shocked to know the broker had defaulted.
“When we contacted the local office of the PSX, it told us that the regulators have no method to immediately solve the issue. We were told that being investors it was our own duty to remain vigilant and looting of money by the brokerage house does not put any liability on the shoulders of PSX or other regulators. We were asked to file claims but many have still not filed because the broker has threatened that in case of any complaint to PSX or any other agency he will never pay off their claims”.
This correspondent made several attempts to contact Abdul Waheed Jan, the owner of this brokerage house, and Mr Ghafar, the manager of the company, but they never responded despite passage of almost one week. They were even sent text messages but whenever this scribe called them they switched off their phones.