Zafar Hijazi, the SECP Chairman, has urged the Pakistan Stock Exchange to fulfil its responsibility as the front line regulator of stockbrokers. The SECP called an emergent meeting with the Board of Directors of PSX yesterday evening to know about the steps that PSX had taken to protect investors of M R Securities, a Lahore-based stockbroker who has most recently absconded.
The PSX Board of Directors regretted that information about default of M R Securities reached the relevant PSX directors relatively late, when the broker had already disappeared. The Board of Directors informed the SECP that it would thoroughly investigate if some of its officials were negligent in discharging their regulatory responsibilities. The Board assured the SECP that it would complete the investigation into the matter by Monday, February 13, and share its finding with the SECP by February 14. This will be followed by a meeting between the SECP and PSX the same evening to take decisive action.
The SECP Chairman categorically told the PSX Board of Directors that it is unacceptable that some stockbrokers continue to defame the market by defrauding investors. He said the time has come that the custody of clients' assets and other factors that put the investors at risk are addressed immediately and necessary measures are put into effect. "There is nothing dearer to my heart than investor protection, rest assured, we will take decisive action if PSX fails to shoulder its responsibility as the front line regulator," he said.
He also expressed his disappointment with the role of auditors of stockbrokers who continue to fail in raising red flags. Instead, irregularities in brokerage houses are being identified by investigations through the joint inspection teams and SECP inspections.
In the meantime, the SECP's team remains present in Lahore collecting and analysing back office data of M R Securities. The SECP has directed the PSX management to immediately inform all affected investors through advertisement in the print media on how to lodge their claims with the PSX against the broker.-PR