Listed companies: SECP asks for reasons behind surge in stock prices

Law requires firms facing unusual trading to disclose developments, if any

ISLAMABAD: In order to protect investors from market abuse, the stock market surveillance team of the Securities and Exchange Commission of Pakistan (SECP) has sought explanation from those companies experiencing a hike in their share prices and traded volumes.

"Such explanation helps clarify if such a movement is attributable to the prospects of the company or it is merely based on rumours," the SECP said in a statement on Friday.

The SECP team seeks such explanation from listed companies on an ongoing basis under Section 97 of the Securities Act 2015. This section requires the listed companies facing unusual trading activity to disclose to the general public details of any development known to the company which could explain the unusual price movement and traded volume.

Recently, the SECP had sought explanation regarding hike in share prices and/or traded volumes from nine listed companies. All of them, except one, have shared their response, which is made public through notices to the Pakistan Stock Exchange (PSX) and their placement on the bourse's webpage.

The SECP advised investors to exercise great caution before investing in shares of a company that had no explanation for the surge in its stock price or traded volume.

"Investors should take into account the announcement made by the companies and PSX, while making investment decisions," it said.

Furthermore, the SECP said it had approached the Federal Investigation Agency (FIA), asking it to take action against those who were spreading rumours about listed companies through social media.

It has shared complete information of some individuals who have been engaged in such activities on the social media, most notably Facebook. It requested the FIA to take all necessary actions including blocking of Facebook accounts and to take cognisance of such activities under cybercrime laws.

SECP Chairman Zafar Hijazi emphasised that individual investors should preferably invest through mutual funds, which provided a safe avenue for investment. "Investors should avoid leveraged speculation in stocks based on rumours as it will likely result in large losses," he cautioned.

Published in The Express Tribune, November 19^th, 2016.

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