Penalty reduced to Rs 200,000 on stock broker

A two-member appellant bench of the Securities and Exchange Commission of Pakistan (SECP) has reduced penalty from Rs 400,000 to Rs 200,000 imposed on a stock broker, who failed to file quarterly financial returns through online Financial Reporting System (FRS). According to the order of the SECP appellant bench, the non-compliance with regard to quarterly accounts, half-yearly accounts and bank details are apparent and established; therefore, the appellant cannot be exonerated.
The order is in the matter of appeal No 93 of 2017 filed by company (the appellant) against the order dated 30/05/17 (the impugned order) passed by the commissioner (SMD) under Section 150 of the Securities Act, 2015 (the Act). Brief facts of the case are that the company in contravention of the Securities and Exchange Commission of Pakistan (the Commission) circular No 4/2013 dated 16/04/13 failed to file quarterly financial returns through online Financial Reporting System (FRS) for the following periods including quarter ended 30 June 2016; quarter ended 30 September 2016 and quarter ended 31 December 2016.
The appellant also did not send the details of all its bank accounts and failed to submit a hard copy of its half-yearly accounts for the period ended 31/12/16 to the Commission, as required through the Pakistan Stock Exchange (the PSX) notice No PSX/N-798 dated 08/02/17. In this regard, a reminder dated 17/03/17 was also sent to the appellant, however, compliance was not observed.
A show cause notice (SCN) dated 10/04/17 was issued to the appellant for the non-compliance. The appellant filed its reply vide a letter dated 14/04/17. Hearing in the matter was held on 19/04/17, which was attended by Muhammad Yousaf Shehzad Khan, who stated; "All required quarterly and half-yearly accounts and bank details as mentioned in the SCN are being filed now."
The respondent, being dissatisfied with the response of the appellant imposed a penalty of Rs 400,000 due to failure to discharge regulatory requirements. The appellant preferred this appeal and reiterated the submissions whereas the respondent has rebutted the grounds of appeal and stated that the impugned order has been passed in accordance with the law and non-compliance of the regulatory obligations is a serious offence which cannot be ignored.
The bench has heard the parties and perused the record. Non-compliance with regard to quarterly accounts, half-yearly accounts and bank details are apparent and established, therefore, the appellant cannot be exonerated. However, subsequent compliance signifies appellants' intention to comply with the regulatory requirements. The bench is inclined to take a lenient view in the matter. "Therefore, while maintaining the impugned order we, hereby, reduce the amount of penalty to Rs 200,000," the SECP Bench added.