SECP Files Criminal Case Against An Insider

ISLAMABAD, (UrduPoint / Pakistan Point News - 29th Mar, 2017 ) : The Securities and Exchange Commission of Pakistan (SECP) Wednesday filed a criminal complaint against an employee of a leading bank for his alleged involvement in insider trading.

The main accused, Syed Misbah Uddin Rizvi, was serving as head, equity and capital market, in the said bank and was responsible for the placement of orders for equity investment or disinvestment of shares on behalf of the bank, said a statement issued here by the commission.

The case, filed in the court of the session's judge, Karachi, is based on an investigation. The SECP found that he had inside information regarding the bank's decisions to invest or disinvest as defined in Section 130 (g) and Section of 129 (d) of the Securities Act, 2015 respectively.

The accused was found involved in inside trading in collusion and connivance with his relatives, Misbah Uddin Rizvi, Syed Khalid Grami and Syed Wajid Grami. The SECP's investigation revealed that the bank employee took advantage of the inside information and was involved in active trading in shares, which was also prohibited under the Employees' Prudential Regulations of the bank.

He made a profit of millions of rupees through this illicit trading. The analysis of the trading data of KATS for the period from August 24, 2012, to February 2, 2016 (review period) obtained from pakistan stock exchange revealed that a number of transactions of Syed Khalid Grami (Khalid) and Syed Wajid Grami matched considerably with the bank in various scrips on different dates in a suspicious manner for their own personal gain.

Syed Misbah effected a series of transactions in different scrips in conjunction with trading activities of the bank in contravention of Section 128 (1) of the Securities Act, 2015. The SECP has also taken up the matter of bank employees' involvement in insider trading with the State Bank of Pakistan for appropriate measures and issuance of policy guidelines.

The SECP actively monitors equity trading in stock market in order to curb market abuses and unfair trading practices such as front-running or insider trading, which negatively affect this basic essence of the markets.

Front-running, a form of insider trading arises when a person engaged in processing or making investment decision or order in his official capacity uses that information for his personal benefit directly or indirectly.

The basic purpose of front running or insider trading is to take advantage of the price movement caused by the large trading order once it is executed in the market. In the process of monitoring, this unusual trading pattern was observed with respect to the above named accused persons.