Stock brokers pocketed Rs44 billion in three years since the increase in UFG ceiling. CREATIVE COMMONS
ISLAMABAD:
As cases of collusive relationship appear in recent years, the Oil and Gas Regulatory Authority (Ogra) has asked the Securities and Exchange Commission of Pakistan (SECP) to chalk out a mechanism for cracking down on brokers and company officials involved in insider trading in shares of oil and gas firms and refineries.
“We have also approached the Competition Commission of Pakistan (CCP), seeking action against a cartel formed by oil and gas companies and refineries, which joined hands with brokers to take billions from the masses on the stock market through manipulation of share trading,” a senior Ogra official told The Express Tribune.
Ogra has also suggested to the SECP to hold meetings on insider trading in the oil and gas sector, but no such deliberations could be held so far.
A big case of insider trading came to light during the tenure of the previous government when stock brokers had prior knowledge of an imminent increase in the Unaccounted-for-Gas (UFG) ceiling for gas utilities from 5% to 7%.
In an investigation, it was found that the stock brokers pocketed Rs44 billion in three years since 2010 in the wake of the increase in UFG ceiling for Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL).
Following the ceiling hike, share prices of SNGPL and SSGC went up from around Rs16 to Rs36, providing the brokers with a windfall.
The brokers were said to have met former Ogra chairman Tauqeer Sadiq before announcement for the upward revision in UFG ceiling, which was pushed back to the earlier level after a month.
The SECP too unearthed a case of insider trading on the Karachi Stock Exchange (KSE) in December 2012 and issued orders against Pakistan Petroleum Provident Fund Trust Company (Private) Limited and one of the employees of Pakistan Petroleum Limited (PPL). The regulator slapped a total penalty of Rs1.5 million for indulging in insider trading.
“We can develop a joint strategy in cooperation with the SECP and CCP to crack down on those involved in insider trading in the oil and gas sector,” the Ogra official said.
As the market was growing, the official underlined the need for a higher degree of monitoring and checking to ensure ethical practices in the stock market.
Published in The Express Tribune, April 30th, 2013.
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At the same time, it also needs to be established as to who is responsible for leaking out the information with respect to gas and oil sector companies that facilitates insider trading both in the oil and gas marketing including retail mafia as as issues like UFG etc. After all the information flows out from some where. We have seen OGRA leaking out information with regard to petroleum prices 3 or 4 days in advance after the retail market goes into spin towards profit making and supplies suspension.