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The Securities and Exchange Commission of Pakistan (SECP) on Wednesday informed the Supreme Court that a bullish stock broker of the Karachi Stock Exchange minted billions, causing huge losses to the national exchequer in 2010 and 2011 by manipulating shares of two gas companies with inside help.
In a major development in Rs100 billion Ogra corruption case, the policy board of the Securities and Exchange Commission of Pakistan (SECP) has submitted its inquiry report to the apex court.The scathing report while confirming the regulatory capture of SECP by vested interests holdsSECP’s former administration responsible for ignoring suspicious trading in the market. The report signed by federal secretaries of finance, law and justice, commerce, SECP’s acting chairman and deputy governor State Bank was prepared on the directions of the apex court, which had ordered an inquiry into SECP’s role in preventing stock market manipulations and insider trading on April 12, 2013.
The latest SECP report endorses an earlier report prepared by ShaziaBaig of the Commission’s Surveillance Wing that suggested that some suspicious trading patterns were identified in the trading of SSGC and SNGPL shares during 2010 and 2011 and a leading stockbroker was involved in pre-arranged trading with National Bank of Pakistan.
“This committee is of the view that the preliminary report submitted by MsShaziaBaig was fairly specific in pointing out the inside information (i.e the anticipated enhancement in UFG by Ogra) and identification of the beneficiaries,” says the report adding that ShaziaBaig was transferred twice after her report which raises question about the conduct of senior managementof SECP at that time.
According to ShaziaBaig’s report, the share price of SSGC was Rs19.95 at the start of September 2010 and thereafter continuously moved upwards and reached its maximum price atRs30.28 on September 30, 2011.
During the price hike, the National Bank of Pakistan was the top buyer with approximately 4 million shares of SSGCL amounting to Rs104 million and the stock market tycoon was the top seller with more than 2 million shares amounting to Rs63 million. According to the report, similar effects of change in UFG benchmark caused hyper activity in the script of SNGPL in the last four months of 2010. It was observed that an unusual turnover of more than 9 million shares took place in the script in a single day’s session.
The SECP’s fresh inquiry committee also made similar observations. “The inquiry committee noted the correlation between dates/timings of Ogra’s decision for enhancement of the provision for unaccounted for gas (UFG), announcement of financial results of the two companies (SSGC and SNGPL) and trading volume of their shares. This examination revealed conspicuous peaks in the trading of these shares before announcement of UFG. Prima facie, the main players in trading of these shares benefited from inside information.”
The findings of the inquiry report also support the earlier investigations of the National Accountability Bureau (NAB) which suggested that a leading stock broker was involved in buying cheaper shares of SNGPL and SSGCL during PPP’s last government with the help of former Ogra chairman TauqeerSadiq who is currently being investigated by the Bureau after his extradition from Dubai on Tuesday. According to NAB at one point of time 51 percent of the available shares of SSGCL were owned by the same stockbroker who later sold them at much higher prices to national institutions including National Bank of Pakistan causing losses worth billions to the national exchequer.
NAB has already questioned former chairman SECP Muhammad Ali and commissioner SECP Imtiaz Haider for their alleged role in the Ogra scam, as both had been working for the companies owned by the same stock market broker.
Although both denied their role in the scam, a NAB spokesman RamazanSajid confirmed that SECP officials were under investigation. Through its April 12 decision, the Supreme Court had set aside the appointment of Muhammad Ali Ghulam Muhammad as chairman SECP while Imtiaz Haider has been recently transferred from Securities Market Division to specialized companies division.
The SECP report also suggests that stock market manipulation took place with the help of former SECP administration.“In view of all the facts taken together the whole affair was too conspicuous to be ignored by the regulator,” says the report adding that the Commission is responsible under SECP Act to check unfair trading practice, it was duty bound to take cognizance of such a noticeable chain of events.
In a major development in Rs100 billion Ogra corruption case, the policy board of the Securities and Exchange Commission of Pakistan (SECP) has submitted its inquiry report to the apex court.The scathing report while confirming the regulatory capture of SECP by vested interests holdsSECP’s former administration responsible for ignoring suspicious trading in the market. The report signed by federal secretaries of finance, law and justice, commerce, SECP’s acting chairman and deputy governor State Bank was prepared on the directions of the apex court, which had ordered an inquiry into SECP’s role in preventing stock market manipulations and insider trading on April 12, 2013.
The latest SECP report endorses an earlier report prepared by ShaziaBaig of the Commission’s Surveillance Wing that suggested that some suspicious trading patterns were identified in the trading of SSGC and SNGPL shares during 2010 and 2011 and a leading stockbroker was involved in pre-arranged trading with National Bank of Pakistan.
“This committee is of the view that the preliminary report submitted by MsShaziaBaig was fairly specific in pointing out the inside information (i.e the anticipated enhancement in UFG by Ogra) and identification of the beneficiaries,” says the report adding that ShaziaBaig was transferred twice after her report which raises question about the conduct of senior managementof SECP at that time.
According to ShaziaBaig’s report, the share price of SSGC was Rs19.95 at the start of September 2010 and thereafter continuously moved upwards and reached its maximum price atRs30.28 on September 30, 2011.
During the price hike, the National Bank of Pakistan was the top buyer with approximately 4 million shares of SSGCL amounting to Rs104 million and the stock market tycoon was the top seller with more than 2 million shares amounting to Rs63 million. According to the report, similar effects of change in UFG benchmark caused hyper activity in the script of SNGPL in the last four months of 2010. It was observed that an unusual turnover of more than 9 million shares took place in the script in a single day’s session.
The SECP’s fresh inquiry committee also made similar observations. “The inquiry committee noted the correlation between dates/timings of Ogra’s decision for enhancement of the provision for unaccounted for gas (UFG), announcement of financial results of the two companies (SSGC and SNGPL) and trading volume of their shares. This examination revealed conspicuous peaks in the trading of these shares before announcement of UFG. Prima facie, the main players in trading of these shares benefited from inside information.”
The findings of the inquiry report also support the earlier investigations of the National Accountability Bureau (NAB) which suggested that a leading stock broker was involved in buying cheaper shares of SNGPL and SSGCL during PPP’s last government with the help of former Ogra chairman TauqeerSadiq who is currently being investigated by the Bureau after his extradition from Dubai on Tuesday. According to NAB at one point of time 51 percent of the available shares of SSGCL were owned by the same stockbroker who later sold them at much higher prices to national institutions including National Bank of Pakistan causing losses worth billions to the national exchequer.
NAB has already questioned former chairman SECP Muhammad Ali and commissioner SECP Imtiaz Haider for their alleged role in the Ogra scam, as both had been working for the companies owned by the same stock market broker.
Although both denied their role in the scam, a NAB spokesman RamazanSajid confirmed that SECP officials were under investigation. Through its April 12 decision, the Supreme Court had set aside the appointment of Muhammad Ali Ghulam Muhammad as chairman SECP while Imtiaz Haider has been recently transferred from Securities Market Division to specialized companies division.
The SECP report also suggests that stock market manipulation took place with the help of former SECP administration.“In view of all the facts taken together the whole affair was too conspicuous to be ignored by the regulator,” says the report adding that the Commission is responsible under SECP Act to check unfair trading practice, it was duty bound to take cognizance of such a noticeable chain of events.
