Securities and Exchange Commission of Pakistan (SECP) has categorically stated that the regulator will not bow to the pressure of powerful brokerage mafia and will continue to take corrective measures to eliminate market manipulation. The SECP also discarded the attempts in media to malign the apex regulator by some of the brokers against which the SECP has recently proposed action for their involvement in market manipulation practices.
This was stated by SECP Spokesperson Imran Ghaznavi, while addressing a press conference held at a local hotel on Thursday. He said that recently, SECP initiated various actions against large brokerage houses on account of security market frauds and market manipulation, as well as finalisation of long-standing proposed prosecutions against brokers and some large business groups.
It is pertinent to mention here that there have been consistent attempts to pressurise the senior management of SECP into not taking action. The situation intensified since the announcement on December 14, 2012 of the initiative by the SECP Chairman to conduct 100 percent onsite inspection of all brokerage houses, he said.
He added that litigation attempting to derail the efforts of the SECP also increased, and every effort was being made to halt enquiries and investigations and impending prosecutions. Imran said that interestingly, a lot of pressure was being mounted by a major media group (not Business Reorder) in an effort to stop the SECP from giving effect to a decision to initiate prosecution against a large group in the regulated sector of the SECP, which had been involved in manipulation worth millions, ever since that decision had become public knowledge, he added.
"A full blown media campaign has been initiated against the senior management of SECP in an effort to malign and discredit them and to delay filing of prosecution," he said. Ghaznavi further said that as part of that propaganda, a news item published in some newspapers alleging that SECP Chairman had undisclosed business with regulatees of SECP.
"In 2005, Muhammad Ali was a 15 percent stakeholder in R I Enterprises, a partnership firm, which he sold on April 4, 2006 through an agreement for sale. Further, he gave a power of attorney to the buyer, specifically substituting him as a partner in his place, and authorising him to do all acts necessary to give effect to the transfer of his interest in the partnership since he was leaving the country at that point in time," he clarified.
Effectively therefore, he severed all ties with the partnership on April 4, 2006, and the authorisation and the agreement to sell clearly evidence this fact. Muhammad Ali is the first Chairman ever of SECP who has declared all his interests in the annual report of the Commission for the years 2010/2011 and 2011/2012. Imran added that section 16 of SECP Act required the Commissioners and Chairman of SECP to disclose all interests which could reasonably be regarded as giving rise to a conflict of interest in the performance of their duties, or in any way result in a possible bias in their decision making.
Muhammad Ali had no interest in R I Enterprises, as he had sold his stake more than four years before being appointed as Chairman, SECP, therefore, neither did this interest exist at the time of his appointment as SECP Chairman, nor was it a requirement of the law since partnerships are not regulated by SECP and the question of conflict in decision making cannot and does not arise.
SECP Spokesperson also clarified that SECP was not statutorily mandated to administer tax matters, as those clearly fall within the statutory domain of the FBR, therefore non-prosecution or otherwise for offences pertaining to tax evasion cannot be ascribed to SECP administration. "When this issue raised by Mansoor Ahmad Janjua with SECP, a detailed response was provided to him in writing and he was invited to inspect all the relevant documents and satisfy himself about the factual position. However, he elected not to do so, and continued to send defamatory emails to officials of the SECP threatening litigation as a pre-emptive measure against his non-compliance with the investigation initiated against Muhammad Ahmad Nadeem Securities Pvt Limited by the SECP on July 31, 2012," he further added.
He said Mansoor Ahmad Janjua was the Company Secretary of that brokerage house at the relevant time, which had been investigated for misappropriating clients' shares in violation of the Central Depository Act, 1997. During the course of the investigation, information was sought from Mansoor Ahmad Janjua through notice under section 32 of SECP Act, 1997, for provision of record and call for examination. Despite service, Mansoor Janjua failed to comply with the notice, for which prosecution has been filed against him on March 8. Failure to comply with notice under section 32 is punishable with imprisonment for a term of up to one year, Imran Ghaznavi concluded.
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