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December 12, 2019

SECP to penalise rumour mongers influencing stock trading

Business

December 12, 2019

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Wednesday warned capital market’s professionals and executives of listed companies of ‘punitive action’ if they are found involved in disseminating misleading information to influence stock trading.

The SECP said some capital market individuals are using the print/electronic/social media for giving their views/opinions to induce the public to trade on the stock exchange. “These persons are neither qualified nor possess the requisite expertise/skill to furnish such opinions,” the SECP said. “As these views are not supported by any research and data, it encourages rumours that affect the overall investment sentiments.”

The commission said misleading views of few individuals are tantamount to inducing public, “based on deceptive information, for investing in securities. Any such said activity by any person is prohibited in terms of Securities Act 2015, the framework governing stock market trading.”

“Considering the legal framework, all persons including the market professionals are advised to be careful while giving any opinion through print/electronic/social media as the same may affect securities trading decision of general public/investors,” it said. “In future, dissemination of any misleading/distorted news/statement may attract the punitive action in terms of Securities Act 2015.”

The law further restricted the securities exchange from sharing information of brokerages and their customers without consent of the SECP. “A securities exchange shall preserve confidentiality with regard to all information in its possession concerning TRE (trading right entitlement) certificate holder and their customers, except that such information may be disclosed by the securities exchange as and when required in writing to do so by the Commission or by a clearing house under its regulations or required under any law for the time being in force, or it is ordered to do so by the Court,” the Act states.

The law empowers the corporate sector’s watchdog to revoke or suspend a licence if it finds incident of misleading information disclosure. The SECP said it would implement zero tolerance policy while protecting the interest of investors/ public.

The commission said it encourages business-friendly regulatory environment for sustainable growth of capital markets. It is also responsible to maintain integrity and efficiency of the stock market, it said.

“SECP is closely monitoring the market activities on regular basis,” it said. “As a result of SECP vigilance, several criminal complaints have been filed against individuals/entities who were involved in market abuses.”

The SECP has already issued prohibitory orders in case of few individuals and leading institutional investors to curb the malpractices and maintain investors’ confidence. “A limited scope thematic review of volume generating brokerage houses is being initiated to check their compliance status with regulatory frame governing permissible mode of financing stock investments,” it said.

The commission further said some executives and directors of listed companies are also disclosing company’s price sensitive information, including its operational and performance related information, through media without prior dissemination of the same by the company to the public through Pakistan Stock Exchange (PSX).

“The listed companies are not promptly responding to any news appearing in media that may affect the opinion of investors,” it said. “To address this issue, SECP has issued necessary directions to PSX.” —

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