SECP files criminal case against brokerage house

Accused broker guilty of creating artificial trading activity

Our Correspondent April 22, 2017

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has filed a criminal complaint against a leading brokerage house for indulging in price manipulation activity called "spoofing".

"Based on an investigation spanning 2014 and 2015, the SECP found that the leading brokerage house and some of its clients were involved in price manipulation of a number of scrips by way of placing large number of non-bona fide orders of small quantity in pre-open session.

"This also entailed placement of buy orders at upper lock in pre-open session and subsequently cancelling the buy orders placed in pre-open session right at the start of the trading session, thereby creating artificial trading activity," the regulator said in a press release on Friday.

"The accused broker has also been found placing buy orders of huge quantity just before the close of the market to entice general investors by creating the artificial demand of the shares and subsequent placement of sell orders to sell their holding at a beneficial price," it said.

The subject activity resulted in substantial gains for the broker and its clients. It may be noted that market manipulation is a criminal offence, and it has been defined in Section 133 of the 2015 Securities Act.

"It is one of the major criminal complaints filed by the SECP in the recent past, showing the SECP's firm resolve for zero tolerance towards market abuse and any malpractices in stock market," the market regulator said.

Published in The Express Tribune, April 22nd, 2017.

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