SECP files criminal case against leading broker

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Friday said it had lodged a criminal complaint against a leading brokerage house for its alleged involvement in the manipulation of the prices of stocks, an activity commonly termed as 'spoofing'.

"Based on an investigation spanning 2014-2015, the commission found out that a brokerage house and some of its clients were engaged in the manipulation of prices of a number of scrips," SECP said in a statement.

It added that the accused were getting away with their alleged activities by placing a large number of non bona fide orders of small quantities in the preopen session –submitting buy orders at upper lock-- and subsequently cancelling them right at the start of the trading session, thereby creating artificial trading activity.

Watchdog said the accused brokerage house has also been found placing buy orders of huge quantities just before the close of market to entice general investors by creating an artificial demand and subsequent placement of sell orders to off-load their holding at an advantageous price, thus generating substantial gains for itself and its clients.

It may be noted that market manipulation is a criminal offence as defined in Section 133 of the 2015 Securities Act.

It is one of the major criminal complaints filed by the SECP in the recent past, showing the SECP’s firm resolve for zero tolerance towards market abuse and any malpractices in stock market, the statement added.

The SECP, as part of its crackdown on fraudulent trading activities, has filed a number of criminal cases against brokerage houses and individuals in 2017.

The cases were filed against Darson Securities (Private) Limited (Darson), CEO of Cedar Capital (Private) Limited (CCPL), a person who manipulated the price of shares of Gauher Engineering Limited (now Drekkar Kingsway Limited), and an employee of a leading bank, who was working as AVP investment, for being involved in insider trading.

The commission is confident that crackdown on such malpractices will go a long way in protecting investors, raising government revenues by transforming the illegal into legal activity in the regulated and documented sector, and saving the foreign exchange currently being sent abroad.