The Securities and Exchange Commission of Pakistan (SECP) has imposed a penalty of Rs 500,000 on a Trading Right Entitlement Certificate (TREC) holder of Pakistan Stock Exchange (PSX) and registered/licensed as a broker with the Commission for violation of the regulatory framework of the SECP.
According to an order issued by Commissioner Securities Market Division (SMD) of the SECP, based on the circumstantial evidences and chain of events mentioned, the SECP has reasons to conclude that it is established that the Respondent (TREC holder) has been found guilty.
Firstly, Rule 12 of the Brokers and Agents Registration Rules, 2001, (Broker Rules) requires a broker to abide by Code of Conduct specified in Third Schedule annexed to the Broker Rules (Code of Conduct). Secondly, clause 19.5 of the PSX Rule Book requires brokers to collect margins from their clients but the Respondent failed to collect margins from its named clients.
Thirdly, the TREC holder, in violation of section 74 of the Securities Act has failed to observe a high standard of integrity, fair dealing, and act with due care, skill and diligence. Fourthly, the Respondent was running an unregistered branch at RYK in violation of regulation 16(2)(g) of the Brokers Regulation, 2016 and regulation 22 of the PSX Rule Book.
In view of the foregoing, violations of the regulatory framework committed by the Respondent are established. The SECP, considering the severity of violations, in exercise of the powers conferred upon it by virtue of section 22 of the Ordinance and section 150 of the Act, hereby imposes a penalty of Rs 500,000 on the TREC holder.
The order shall dispose of the proceedings initiated through Show Cause Notice (SCN) bearing No 1(53) SMD/LCID/2015 & 2(15) SMD/PRPD/2017 dated September 22, 2017. The show cause notice was served on ("Respondent") by the Securities and Exchange Commission of Pakistan (Commission) under section 22 of the Securities and Exchange Ordinance, 1969 (Ordinance) and section 150 of the Securities Act, 2015 (Securities Act). The Respondent is a Trading Right Entitlement Certificate ("TREC") holder of Pakistan Stock Exchange ("PSX") and registered/licensed as a broker with the Commission.