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September 29, 2019

SECP asked to reclaim cases ‘wrongfully’ referred to LEAs

Business

September 29, 2019

ISLAMABAD: The policy board of the Securities and Exchange Commission of Pakistan (SECP) has repeated its demand for the corporate and financial sector’s watchdog to shed reliance on law enforcement agencies in dealing with its cases, while approving a centralised negotiation system to ensure fair and consistent decisions, a senior official said on Saturday.

“In the past few years, despite having requisite powers under the legislation, the commission had been referring cases to law enforcement agencies that fell within its regulatory ambit and that should have been dealt with by the commission itself in accordance with law,” the official of told The News, referring to the policy board’s latest decisions.

In May, the policy board asked the SECP to cease the practice of refereeing cases and lending personnel to the law enforcement agencies, and instead deal with these cases by itself as it has requisite powers under legislation. “This practice must cease forthwith and no case should be forwarded to any law enforcement agency in the absence of an inconvertible reason based on the commission’s legal inability to take action and prior clearance by the commission as well as the policy board,” it said then.

The SECP, however, did not act upon the direction.

The policy board, which met under the chairmanship of Khalid Mirza, again directed the commission to check “unwarranted, and possibly illegal, intervention by outside forces and harassment as well intimidation by staff which had debilitated the commission”.

The SECP was further asked to withdraw cases “wrongfully referred to law enforcement agencies” and repatriate staff seconded to these agencies.

The meeting underscored the need for the commission to objectively determine –through a departmental enquiry in each case – the factual position regarding the charges being faced by certain staff members that had been implicated, or were likely to be implicated, in legal cases; and if so deemed appropriate/necessary for the commission to stand up and defend these staff members in all forums.

The policy board comprises ex-officio members of the ministries of finance, commerce, and law, State Bank of Pakistan, SECP and people from the private sector.

The board further directed the commission to redress several stock market-related governance issues.

The official said the onerous listing rules of Pakistan Stock Exchange obviously needs to be “greatly simplified, rationalised and made considerably more issuer friendly”.

“The commission needs to revamp its processes and approach in order to expeditiously deal with and clear new issue applications,” the official added, requesting anonymity.

The policy board approved the setting up of a centralised adjudication division in the commission.

“This division will be the quasi-judicial arm of the commission and be entrusted the responsibility for its entire adjudication work pertaining all regulated entities and persons instead of the existing practice of adjudication being carried out separately by various departments/divisions within the commission,” an official statement said. “The centralisation of adjudication would likely enhance the effectiveness of the commission, ensure fair and consistent decisions, and minimise any creeping risk of arbitrariness in the discharge of its judicial function.”

The board also took up the matter of a statutory regulatory order (SRO 1048 (I)/2019), issued earlier this month, requiring companies to file a tax compliance certificate.

The policy board considered the order to be ultra vires and beyond the jurisdiction of the SECP. It has directed the commission to take steps for its withdrawal after taking legal advice.

Amongst other decisions, SECP’s financial statements, for the year ended June 30, 2019, were presented to the board and approved. “The commission’s annual report will be finalised after the members of the policy board have had a chance to review it and provide their observations,” the statement added.

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