SECP fines Fairtrade Capital Securities
Company failed to maintain segregation of clients’ assets among other issues.
Company failed to maintain segregation of clients’ assets among other issues. CREATIVE COMMONS
KARACHI:
The Securities and Exchange Commission of Pakistan (SECP) has imposed a penalty on Fairtrade Capital Securities for failing to maintain segregation of clients’ assets, not preparing know-your-customer (KYC) and customer due diligence (CDD) policies, and imposing (undue) late payment charges on its clients.
According to the order passed on June 18 and made available to the general public on Thursday, the apex regulator imposed a penalty of Rs25,000 on the brokerage house, saying the segregation of clients’ assets is of paramount importance for the protection of investors’ interests.
The commission ordered the inspection of the books of Fairtrade Capital Securities, which resulted in an inspection report on January 28, 2013. The inspection report, which was later shared with the brokerage house for its comments, highlighted that the company was involved in the imposition of late payment charges to its clients.
It also mentioned that besides failing to maintain a standardised account opening form, the company did not classify its directors and employees as proprietary in the UIN database maintained by the National Clearing Company of Pakistan.
In its response to the inspection report, the company claimed that it had opened a separate account for the handling of clients’ funds. However, the evaluation of the bank account tagged as clients’ account revealed that no activity had taken place during December 31, 2012, and March 31, 2013.
The company also accepted that it was involved in the imposition of late payment charges. It told the SECP that the practice was stopped ‘immediately’ after the regulator’s inspection.
The inspection report also revealed irregularities in the calculation of net capital balance as on December 31, 2012.
Published in The Express Tribune, June 20th, 2014.
The Securities and Exchange Commission of Pakistan (SECP) has imposed a penalty on Fairtrade Capital Securities for failing to maintain segregation of clients’ assets, not preparing know-your-customer (KYC) and customer due diligence (CDD) policies, and imposing (undue) late payment charges on its clients.
According to the order passed on June 18 and made available to the general public on Thursday, the apex regulator imposed a penalty of Rs25,000 on the brokerage house, saying the segregation of clients’ assets is of paramount importance for the protection of investors’ interests.
The commission ordered the inspection of the books of Fairtrade Capital Securities, which resulted in an inspection report on January 28, 2013. The inspection report, which was later shared with the brokerage house for its comments, highlighted that the company was involved in the imposition of late payment charges to its clients.
It also mentioned that besides failing to maintain a standardised account opening form, the company did not classify its directors and employees as proprietary in the UIN database maintained by the National Clearing Company of Pakistan.
In its response to the inspection report, the company claimed that it had opened a separate account for the handling of clients’ funds. However, the evaluation of the bank account tagged as clients’ account revealed that no activity had taken place during December 31, 2012, and March 31, 2013.
The company also accepted that it was involved in the imposition of late payment charges. It told the SECP that the practice was stopped ‘immediately’ after the regulator’s inspection.
The inspection report also revealed irregularities in the calculation of net capital balance as on December 31, 2012.
Published in The Express Tribune, June 20th, 2014.