SECP takes action against three illegal brokerage houses

The Securities and Exchange Commission of Pakistan (SECP) has taken action against three illegal brokerage houses and fake members of stock exchanges during 2007. It is learnt on Monday that the SECP received a total of seven complaints against illegal brokers/members during this period.
Out of total complaints, three brokerage houses were found legal, whereas three were working illegally. However, the investigation against one broker is under way. The commission received reports/complaints from various sources that some unauthorised brokers/agents were dealing in the securities business in various towns and cities in violation of Section 5-A of the Securities and Exchange Ordinance, 1969.
To curb the activities of these illegal and unauthorised entities, a comprehensive campaign was launched to protect the interest and confidence level of investors and general public.
Sources said that the SECP had also directed the stock exchanges with the instructions to notify all their members to operate branch offices only after duly informing the exchanges and in strict compliance with applicable rules and regulations.
The members/brokers were advised to refrain from dealing with such illegal/unauthorised brokerage houses/branches and to inform the exchange and the Commission if any such entities came to their knowledge. The exchanges were also advised to establish a dedicated helpline to disseminate information to the general public about the status of the brokerage houses and their authorised branches and widely publicise this facility in the national media.
The SECP established its Securities Market Division (SMD), South in Karachi. The SMD through its continued vigilance and quick disposal of investors complaints is closely monitoring the dealers/agents to curb this menace of illegal brokerage houses and restore investor confidence of the capital market.
The move against these illegal entities was taken up on priority basis during last year. Resultantly, the number of complaints received during the year on this account has reduced substantially against last year.
During 2007, the SMD (North) received only five complaints as compared to 19 in 2006. These five complaints were received from NWFP and Sindh, while in 2006, most of the complaints against illegal brokerage houses/branches were from Punjab.
Since the establishment of SMD (South) complaints pertaining to the KSE are being dealt by SMD (South). During this period, two cases of illegal brokerage houses were received by SMD (South). Thorough investigation was conducted in all the cases, including undisclosed visits to the business addresses of the entities reported through Company Registration Offices and by SMD officials.