In order to protect investors from market abuse, the stock market surveillance team of the Securities and Exchange Commission of Pakistan (SECP) has sought explanations from those companies experiencing hike in share price and/or traded volume. Disclosure of such explanation helps clarify if such a movement is attributable to the prospects of the company or it is merely based on rumours.
The SECP team seeks such explanations from the listed companies on an ongoing basis under Section 97 of the Securities Act, 2015. This section requires the listed companies facing unusual trading activity to disclose to the general public details of any development known to the company which could explain the unusual price movement and traded volume.
While seeking such explanations remains an ongoing exercise, most recently SECP has sought explanation regarding hike in price and/or traded volume from nine listed companies. In alphabetical order, these are Aruj Industries Limited; Hussain Sugar Mills Limited; KSB Pumps Company Limited; Merit Packaging Limited; Nazir Cotton Mills Limited; National Silk & Rayon Mills Limited; Sargodha Spinning Mills Limited; United Distributors Pakistan Limited and Khyber Textile Mills Limited. All of them, except one, have shared their response and the same is made public through PSX notices on PSX's webpage.
Investors are advised to exercise great caution before investing in the shares of a company that has no explanation for a surge in its stock price or traded volume. Investors should take into account, announcement made by the companies and PSX, while making investment decisions. Further, SECP has approached FIA to take action against those who are spreading rumours about listed companies through social media.
SECP has shared complete information of some individuals who have been engaged in such malicious activities on social media, most notably Facebook. The FIA has been requested to take all necessary actions including blocking of these Facebook accounts and to take cognisance of such activities under cybercrime laws.
SECP has also placed a link on PSX's website which warns the investors from taking investment decision based on hearsay, rumours, and tips/advice disseminated by unregulated persons through various social media networks. Zafar Hijazi, Chairman SECP, emphasised that individual investors should preferably invest through mutual funds, which provide a safe and profitable avenue for investing in the stock market. Investors should avoid leveraged speculation in stocks based on rumours as it will likely result in large losses.-PR
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