SECP moves court against Darson Securities

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has yet again moved a court against another brokerage and its clients for manipulating share prices and volume involving at least Rs14 million.

The SECP, in a statement on Tuesday, said it filed a criminal complaint, at a session court, against Darson Securities (Pvt) Ltd and its clients, namely MRA Securities (Pvt) Ltd and AHM Securities (Pvt) Ltd, for tinkering with the prices and volume of 28 stocks at the Pakistan Stock Exchange (PSX) between April 1, 2012 and May 15, 2014.  The commission’s investigation found that the group fraudulently created the artificial market during the period.  The commission said the group traded in illiquid shares in such a manner, which gave the impression of active trading and henceforth sold their position to public. Further, when they entered the ready market, the volume generated by the group was more significant as compared to the volume of the market as a whole.

The group earned a profit of Rs14.2 million through this activity, it added. “The accused are in complete violation of settled principle of law as well as provisions of section 17(a) and 17(e) (ii) (v) of the 1969 Securities and Exchange Ordinance, and all enabling provisions,” said the SECP.

Early this month, the commission had lodged a criminal complaint against Cedar Capital and his two clients for manipulating the share price of Pak Electron Ltd. The commission had also reported a Lahore-based stockbroker MR Securities to international securities regulators through the International Organization of Securities Commissions. The SECP also requested the Financial Monitoring Unit to initiate an action against the brokerage under the Anti-Money Laundering Act, 2010.

Reporting to international agencies aimed at to tighten noose around the culprits who fled away from the country. The SECP said the owners of some defaulting brokerage houses, such as Ace Securities, Stock Street and MR Securities were believed to be hiding abroad.  Multiple cases of defaulting brokers have emerged on the scene since the divestment of PSX late last year. Chinese-led consortium acquired 40 percent strategic stake in PSX and conditioned the release of fund with the settlement of funds owed to defaulting brokers.

Though the investor has disbursed the fund for further distribution to the PSX’s shareholders, yet the government has yet to recover the amount, which is in billions of rupees, from the defaulting brokers.  The commission said it would confiscate assets of such brokerages to return the money to the hoodwinked investors.