SECP files criminal case against bank employee

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has filed a criminal complaint of insider trading and fraud against a former employee of one of the country’s largest banks in a court.

The SECP, in a statement on Thursday, said the accused, namely Khalid Iqbal, was the head of the bank’s capital market operations. Iqbal had unrestricted access to the information regarding investment decisions of the bank and the authority to make the decisions. He had inside information as defined in the Securities Act 2015. 

“Violating the securities law as well as his employer’s investment policy, this rogue employee abused his authority and engaged in trading of certain illiquid shares listed on the Pakistan Stock Exchange,” the commission said. “He bought large quantities of these shares at unjustified prices using the money of the bank. ...executed this trading activity with his Dubai-based accomplice and together they made millions of rupees in illegitimate gains at the cost of the bank.”

The bank suffered a substantial loss at the hands of the employee and conducted an internal inquiry against him.  The SECP said the bank cooperated with the commission in investigating the case. “He is no longer with the bank. However, investigation is going on to catch more of his accomplices.”

Zafar Hijazi, chairman of SECP said white collar criminals in the stock market think that their crime is too sophisticated to be caught, “but this case is a poignant reminder that the securities’ regulator is on their trail.”

“The SECP has been investing in its capacity to tackle stock market manipulation and there are more such high profile criminal cases in the pipeline,” he added. Watchdog, as part of its crackdown on fraudulent trading activities, filed a number of criminal cases against brokerage houses and individuals in 2017.

The criminal cases have been filed against Darson Securities (Private) Limited, CEO of Cedar Capital (Private) Limited, 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 assistant vice president investment, for being involved in insider trading.

The commission said crackdowns 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. SECP is implementing the capital market development plan to provide a clear direction to the market.