Senate body asks SECP to probe alleged insider trading by banks

ISLAMABAD: A senate body on Wednesday asked the Securities and Exchange Commission of Pakistan (SECP) to conduct a ‘thorough’ probe into an alleged underwriting of shares and stocks price manipulation by the management and directors of Bank of Punjab from January 2015 to March 2017. 

Senator Saleem Mandviwalla chaired the meeting of the senate standing committee on finance.   Deputy Chief Executive Officer (CEO) at Bank of Punjab Khalid Tirmazi, however, stunned the meeting’s participants by disclosing that Ali Nadeem, who alleged the bank’s officials for share price manipulation and insider trading, was affiliated with the companies involved in one billion rupees worth of defaults.  

The committee’s members got annoyed after this disclosure as all of them unanimously spoke out against Nadeem, saying why the complainant did not divulge his own conflict of interest. 

The SECP high-ups told the senate panel that the regulator is already conducting an inquiry against four banks, including Bank of Punjab, UBL and Bank of Khyber for their alleged involvement into manipulation of share prices and insider trading. 

“We cannot commit about the timeframe of this probe as we will have to check details about 10,000 shareholders,” an SECP official told the meeting.  “It may take three to six months but no specific timeframe can be given to this account 

The committee listened to grievances of some shareholders of the bank as well as the senior management of the Bank of Punjab.  Senator Osman Saifullah Khan said the senate committee should wait for the SECP’s findings.  

“We are watchdog on the departments,” Khan said. “If SECP doesn’t take action then the senate panel could take up this issue.”   Mandviwalla and senator Kamil Ali Agha reminded the members about the past’s records tampering in SECP. Parliament would have to play its role of oversight, they said. 

Tirmazi of Bank of Punjab said negative reporting in media caused impact on the working of the bank.   The balance sheet of BoP, he said, stood at Rs164 billion with nonperforming loans (NPLs) of Rs19 billion. But, now the balance sheet jacked up to Rs650 billion and NPLs came down to just Rs7.5 billion, he added. 

In 2009, the State Bank of Pakistan (SBP) revised up the capital adequacy ratio requirement to Rs35 billion, causing a hit of Rs 16 billion for the Bank.  The BoP’s deputy CEO said there was no option but to issue shares to meet the new requirements. He said the complainant Nadeem, in letters to SBP, SECP and provincial government, argued that the share price should be Rs35.  

“Such complaints caused delays in issuance of share price, which was approved by the bank’s board in accordance with rules and procedures,” Tirmazi said.    The senate body decided to wait for the SECP to compile a report after deeply looking into the allegations. If there are irregularities or illegalities found in the whole process the committee will then look into the matter.