The Securities and Exchange Commission of Pakistan (SECP) has, under Section 24 (2) of Central Depositories Act, 1997 as well as offences under relevant provisions of the Pakistan Penal Code, filed a criminal complaint in a court against Cliktrade Ltd, a former member of the Karachi Stock Exchange (KSE) for not transferring shares/funds and for unauthorised pledges of clients' shares and other prohibited activities. Arrests warrants have been issued for all the eight accused.
The SECP had received a number of complaints against the brokerage house. The brokerage house failed to comply with the SECP directions to resolve complaints and to transfer shares into respective Central Depository Company (CDC) accounts. Consequently, on June 26, 2009, the SECP suspended registration of Cliktrade along-with four other brokerage houses.
The SECP appointed enquiry committees comprising officers from the Commission, KSE and CDC to enquire into the matters relating to unresolved complaints against the five brokers. The scrutiny of records revealed that the brokerage house, consent by clients, transferred shares and pledged them with the bank to obtain financing.
The finances so obtained were mostly used to liquidate liabilities of brokerage house or its directors, their relatives and friends. The brokerage house and its 'bigwigs' also misused the powers given to them under CDC sub-account opening form in moving or pledging the shares of their clients from their respective sub-accounts, resulting in a total loss to the clients.
On the basis of enquiry report, on June 11, the SECP filed a criminal complaint in the court of the Session Judge Karachi South against Cliktrade and others. This is the second such complaint as the first was filed against Capital One Equities Ltd on April 5, 2010.
The copies of enquiry report on Cliktrade and criminal complaint are available on the SECP web-site. The SECP has also finalised enquiry reports in the matter of remaining three expelled members of the KSE. Based on these reports, legal action is being taken against those who were involved in prohibited activities. The SECP reiterates that it is fully committed to preserving the integrity of the capital market and safeguarding the investors' interests.-PR
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