KARACHI: Representatives of brokers of the Karachi Stock Exchange (KSE) on Tuesday criticised the Federal Investigation Agency (FIA) for taking action against AKD Securities CEO Farid Alam on the basis of a “flawed research report”.
The FIA questioned Alam along with two other officials of AKD Securities after its investigation revealed that Employees Old-Age Benefit Institution (EOBI) invested Rs337.6 million in the shares of a textile company in 2010 following a flawed research report by AKD Securities.
The report had overstated the company’s earnings per share and also made a favourable forecast about investment prospects. The EOBI made the investment, which cost it a loss of approximately Rs250 million, according to FIA.
Court sends three AKD Securities' officials on five-day remand
Speaking to The Express Tribune on Tuesday, KSE Brokers' Association Chairman Yaseen Lakhani said it was “illegal” to arrest the CEO of a brokerage house on the pretext of a flawed research report. “Arrest the officials of EOBI because they were the ones who made the investment decision,” he said.
He added that as per mutually agreed terms, the police and the FIA must inform the management of the KSE before taking action against any member of the stock exchange.
According to him, the bearish sentiment that has gripped the stock market since Tuesday morning has nothing to do with the FIA-brokers tussle.
EOBI scam: FIA raids AKD office, detains 3 directors
Saying that creating bullish and bearish trends in the stock market was something beyond the brokers’ capacity, Lakhani said the decline in the KSE benchmark index so far in the day was “normal”.
The KSE-100 Index dropped nearly 500 points just after the beginning of trading on Tuesday. However, it recovered afterwards and stood at 32793.7 points at 1:00pm, down 0.65% or 215 points from the start of trading.
According to stock broker Arif Habib, the KSE management was also getting in touch with the FIA. He added that the government bodies like the FIA must get the Securities and Exchange Commission (SECP) - the apex regulator of the capital markets - in the loop before taking action against a stock broker.
Meanwhile, AKD Securities Chairman Aqeel Karim Dhedhi has gone to court against the FIA.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ