In the series of disclosures another event takes place in the stock market. Pakistan Stock Exchange (PSX) shakes as stockbrokers steal Rs7 billion from their clients. PSX recently gained worldwide popularity and was labeled as one of the best performing stock markets in the region.
In an interview with Dawn on Thursday, Muneer Kamal, Chairman of PSX shared that brokers had indeed swindled the investors. He affirmed:
“It is not the first time this has happened. Similar reports have also surfaced in the past. However, our standard operating procedures are now very strict and those involved [this time] will not succeed in their nefarious designs”
In addition, he guaranteed without any second thoughts that:
“Though some investors have faced losses, the PSX in general is safe as it is a very robust market”
Additionally, he promised that the brokers responsible “will not be spared”.
Also Read: Pakistan Stock Exchange suffers Rs350 billion loss in 1 week
Investigation in Progress
Recently, the Security and Exchange Commission of Pakistan (SECP) initiated a full-on investigation in the billion rupees scandal. The Interior Ministry has also pressurized the authorities to make sure that the brokers accused do not leave the country, and also to penalize them as per the law.
The commission stated that:
“The SECP has taken serious note of fraud by MR Securities, a Lahore-based stockbroker”
An estimated fraud of Rs4 billion has been witnessed in Lahore alone, which has added even more to the grimness of the situation. It has been reported that the commission has also arranged a special meeting with the PSX’s board of directors.
Accepting the commission’s duty to protect the stakeholder’s welfares, Zafar Hijazi, SECP’s Chairman reiterated that such activities will not be tolerated.
PSX’s directors, on the request of the Chairman are investigating its officials who have been negligent towards their responsibilities. The investigation report will be completed by 13th February and will be submitted on 14th February.
SECP declared that the commission “will take decisive action if PSX fails to shoulder its responsibility as the front-line regulator”
Zafar expressed disappointment at the evaluation of stockbrokers by the auditors and pointed out that the investigations carried out through joint inspection teams and SECP inspections, are recognizing the loopholes in brokerage houses.
Quick Read: Chairman of SECP advises cautions at investors’ free flowing funds in the stock market
Initial Findings
The series of scams took place in the course of six months. According to the initial reports, the suspect stockbrokers baited the stakeholders with an offer of a 20% profit on their investments. The brokers, after having secured the investments, disappeared on the investors.
So far MR Securities, Hilink Securities and S Securities have been named responsible for the scam. Additionally, brokers Wamiq and Waheed Jan have also been found guilty for supposedly cheating investors from Karachi, Lahore and Islamabad.
SECP came in action when Lahore-based MR Securities suddenly seized its operations. Hilink Securities’ case is in progress at the National Accountability Bureau, and they have already arrested everyone connected to the case.
The officials have raided and seized the office of Waheed Jan in Islamabad, along with the main and sub-offices of MR Securities in Sahiwaal, Multan and Bahawalpur. Data recovered from the raids is to be analyzed by the team of SECP officials.
PSX’s sources informed Dawn that such incidents take place with the collaboration of both the investors and brokers to stay out of governing tax net.
The official stated:
“This is an absolutely illegal practice, and brokers and investors usually pursue these lines to avoid taxation and disclosing the source of their income. Obviously, black money is frequently involved in such practices, so it also opens the doors for scams”
Photo: GettyImages
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