SECP files criminal case against brokerage house CEO

Cedar Capital CEO, two clients accused of manipulating PAEL share prices

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has filed a criminal complaint against the chief executive officer of Cedar Capital (Private) Limited (CCPL) and his two prominent clients for manipulating share prices of Pak Elektron Limited (PAEL) at the Pakistan Stock Exchange.

The case was filed in the court of sessions judge Karachi on Friday, according to a statement issued by the SECP.

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SECP’s investigation revealed that CCPL clients fraudulently induced a potential market investor to trade in PAEL shares by manipulating the price and volume and creating an artificial market.

The investigation report covers two review periods - from April 1, 2013 to April 16, 2013 and from May 17, 2013 to July 8, 2013.

The accused, as part of their scheme, traded 13.433 million shares of PAEL constituting 18% of the total trading volume during the first period.

During the second period, the accused traded 19.416 million shares of PAEL, which comprised 22% of the trading volume during the period.

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While taking such a large long position in the shares, the group/co-accused generated a substantial volume each day. Furthermore, when they entered the market, the volume generated by the group was more significant as compared to the volume of the market as a whole.

The accused were in complete violation of the settled principle of law as well as provisions of Section 17(a) and 17(e) (ii) (v) of the 1969 Securities and Exchange Ordinance and all enabling provisions.