Failure to submit financial returns: SECP issues 134 letters to brokerage houses

The Securities and Exchange Commission of Pakistan (SECP) has issued 134 letters to the brokerage houses who failed to submit their financial returns and 90 letters were issued to the irregular filers. According to the SECP annual report (2014-15), during the period under review, 134 letters were issued to the brokerage houses who had failed to submit their financial returns and 90 letters were issued to the irregular filers requiring them to ensure submission of pending quarterly financial returns while ensuring full compliance in future.
During the year, 928 annual audited financial statements of listed and non-listed companies and companies registered under Section 42 and 43 of the Companies Ordinance, 1984 were examined and explanations with regard to various violations observed during the examination of the audited financial statements were sought. During the year 2014-15, inspections of 15 entities (9 Asset Management Companies managing 88 notified entities, 2 Trustees, 2 Modarabas, one Investment Bank and one Insurance company) were conducted, covering 40 percent of the total NBFC and Modaraba Sector. Inspections of the trustees were conducted during the year as per the requirements of the assessment programme of International Organisations of Securities Commissions (IOSCO). Further, inspections of two insurance companies were also initiated, out of which one concluded during the year. Comparative statistics pertaining to onsite inspections, for the last two years.
Within the capital markets, in order to ensure the orderly execution of the market operations, significant measures have been taken. In various instances of non-compliance with the regulatory provisions, 26 warning letters and 38 enforcement orders were issued to the brokers of stock exchanges and individual investors. During 2014-15; 5 detailed enquiries into the dealings, business or other transactions of various market participants were initiated on suspicion of market manipulation and insider trading.
Besides the alerts generated by the Surveillance System, SMD keeps a close watch on stock market by continuously observing index movement and analyzing the impact of media reports. Manual alerts are being generated as a result of tracking the movement in the stock market index and its sector wise analysis which provides leads for further investigations by the surveillance team.
Among the 4 enquiries initiated in FY14, three enquiries were successfully completed during FY15. In light of the findings of these enquiry reports, various enforcement actions are in process against the concerned market participants. A total of 46 cases of insider trading, violations of broker rules and listing regulations (including the ones initiated through findings of the enquiries) are currently in process of adjudication, the SECP added.