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October 29, 2013
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SECP’s revised inquiry confirms regulatory capture by stock market tycoons: Aqeel Karim Dhedhi, JSCL objections rejected

October 29, 2013

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ISLAMABAD: A revised inquiry report approved by the policy board of the Securities and Exchange Commission of Pakistan (SECP) has confirmed the regulatory capture of the commission by some powerful stock brokers who minted billions by insider trading, The News has learnt.

According to sources, the report, to be submitted to the Supreme Court of Pakistan, implicates former SECP Chairman Mohammad Ali, Commissioner SECP Imtiaz Haider and some stock market tycoons in insider trading.

The report, a copy of which is available with The News, was approved on October 24 in a special meeting of SECP policy board chaired by Federal Secretary Finance Dr Waqar Masood.

Sources said the report strengthens the investigations of the National Accountability Bureau (NAB) in Rs100 billion Ogra corruption case as it confirms that the stock market tycoon Aqeel Karim Dhedhi (AKD) minted billions by manipulating the shares of gas utilities companies SSGCL and SNGPL through inside help in 2010 and 2011.

According to NAB sources, Dhedhi is accused of using inside information about raise in UFG (unaccounted for gas) benchmark during the tenure of ex-Ogra Chairman Tauqir Sadiq to make billions of rupees by manipulating the shares of the gas companies. NAB has already interrogated former SECP officials for their alleged role in the Ogra scam.

The bureau is expected to file the final reference in Ogra scam in the first week of November and the fresh report is likely to be made part of the evidence.

The initial inquiry by the SECP policy board was conducted on the orders of the Supreme Court which had directed the board on April 12, 2013 to probe the role of commission in preventing stock market manipulations and insider trading.

The first inquiry report was submitted to the apex court on July 10 but the apex court directed the board to review the report after objections raised by accused persons.

The board constituted an independent

committee on July 22 to look into reservations expressed by the accused persons and companies. The committee drafted a detailed report which included para-wise reply to the objections raised by Dhedhi and others.

In its revised report, the committee endorsed the findings of the initial report which held SECP’s former administration responsible for ignoring suspicious trading in the market.

AKD had raised 16 objections to the first report of the policy board. He objected to the appointment of Bushra Aslam as member of the Policy Board’s inquiry committee saying that Bushra was herself accused in the petition filed with the Supreme Court and there was a case of conflict of interest.

The committee replied that Bushra was only involved in the petition to the extent of only communicating orders of the commission to the petitioner and was not made party in personal capacity. It said there was no conflict of interest in her appointment as Secretary of the Board.

AKD also accused the committee, which prepared the first report, of bias and unfairness. “I feel the committee acted at the behest of some of my competitors with the target of maligning and defaming me,” he said. He added that on the issue of trading in the shares of SSGCL and SNGPL, the committee based its findings on the inquiry report prepared by former SECP surveillance officer Shazia Bag while ignoring another report prepared by the Securities & Market Division.

In its reply, the committee refuted his allegations saying the proceedings were conducted in a transparent manner. “It is interesting to note that though AKD is not part of SECP’s organizational hierarchy, yet he seems to be well aware of the internal working of the regulator and knows what proceedings have been undertaken in this case,” it said.

JSCL, which was named in a complaint by the SECP along with a number of other parties in the initial inquiry report, also raised concerns on five points. Most importantly, the JSCL noted the fact that the SECP did not provide the opportunity of being heard to it despite the fact that JSCL had acted responsibly and volunteered to provide any information and explanation that the commission may have required.

The committee offered no comments to that saying that the matter pertains to the SECP.Former SECP officials Mohammad Ali and Imtiaz Haider also raised objections to the initial inquiry. The committee responded to all the objections in its para-wise reply.

The original report of SECP Policy Board had endorsed an inquiry conducted by Shazia Baig of SECP that suggested that some suspicious trading patterns were identified in the trading of SSGC and SNGPL shares during 2010 and 2011 and Akeel Karim Dhedhi was involved in pre-arranged trading with the National Bank of Pakistan.

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