LAHORE:
More than 1,000 investors have allegedly been deprived of an amount totalling Rs261 million by Stock Master Securities (Private) Limited, which operated in the Lahore Stock Exchange (LSE), sources familiar with the development have revealed.
The Federal Investigation Agency (FIA) has initiated a probe into the matter and summoned the chief executive and directors of the company after examining records and recording statements of affected investors, The Express Tribune has learnt.
Sources, while talking to The Express Tribune, said that Stock Master Securities’ Chief Executive and Director Abdul Qayyum Chishti and Director Ikramullah Khalid had established their business in Room M-10 in Lahore Stock Exchange’s building, and received considerable amounts from thousands of investors for the trading of shares.
Sometime in the months of March and April this year, stock master securities suddenly halted trading in securities. A major chunk of securities of more than 1,000 account holders worth Rs261.21 million have been shared by the management of Stock Master Securities and the directors of the company have gone underground, victim Pervez Tufail has alleged during the course of enquiry.
According to statements issued by the company on April 24, 2012, Rs2.325 million – including Rs0.914 million in cash and 0.145 million in stock – were lying in Pervez Tufail Chohan’s account number 6529 and Central Depository Company subaccount number 4200. Later, only 32,000 shares remained in the account, while the cash and shares had purportedly been withdrawn, and the latter sold by the management.
The FIA Corporate Crime Circle (CCC) has been charged with the probe after receiving directives from the FIA’s Headquarters in Islamabad, and references from the Human Rights Cell (HRC) of the Supreme Court of Pakistan.
The contents of orders issued by the HRC, addressed to Director General FIA, read: “Take notice that in pursuance of the orders of the Chief Justice of Pakistan, you are required to submit a report on the application of complainant/victim Pervez Tufail Chohan ...”
After receiving orders, the FIA Headquarters has referred the matter to Director FIA Punjab, who has entrusted the enquiry to FIA CCC Lahore.
The contents of the FIA’s letter read: “Brief facts are that the subject reference made a complaint to the Chief Justice of Pakistan against Abdul Qayyum Chishti and Ikramullah Khalid, who extorted huge amounts from the innocent Pakistani people and the amount was shifted abroad fraudulently through Stock Master Securities (Pvt) Limited company. An enquiry has become allotted to the subject HRC and entrusted to FIA CCC for probe.” [sic]
Some victims deprived of amounts more than Rs3 million are: Farhat Ali (Rs4.56 million); Muhammad Tariq Javed (Rs4.50 million); Muhammad Pervez Akhtar (Rs3.41 million); Rao Muhammad Bashir (Rs3.17 million) and Muhammad Naseem (Rs3.10 million).
After receiving complaints by investors and account holders, the office of the company has been sealed by the management of the Lahore Stock Exchange.
Published in The Express Tribune, July 5th, 2012.
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Where is SECP and Stock Exchange?
It is very irony and disappointing that default of members at stock exchanges continue to occur despite claims of SECP and stock exchanges for making regulatory reforms in the stock market. However, i am of the view that these defaults shall continue to occur till the time structural changes are made in the system. Shares of the investors should not be entrusted to brokers but instead shares mst be credited to investors' own independent cdc accounts on each settlement. Moreover, system audit regulations shaould also be amended to privde that (i) audit is conducted at the close of every financial year instead of existing practice of two years. (ii) auditors must verify that the shares of investors refelcting in the ledger statement of brokerage house match with the balance as shown in sub-accounts of the investors. If no such change is made, people will continue to suffer and SECP will not be able to protect the investors.
This is so sad that when other world is going beyond the limits in every filed, we just not able streamline our businesses. There were so many frauds were found in brokerage house in last few years, but no one feels that it going to be a routine that collect money from poor people and flee abroad. My appeal to SECP and SBP to steps to make brokerage houses under Banking companies guideline, or ask banks to start equity trading from their plate forms like in middle east.