The Securities and Exchange Commission of Pakistan (SECP) has filed criminal complaints in a court against M.K.A. Securities (Private) Limited and Prudential Securities Limited for fraud. Criminal complaints have been filed against the two former member companies of the Karachi Stock Exchange (KSE) for not transferring funds and unauthorised pledges of clients’ shares and prohibited activities under the Central Depositories Act, 1997; Pakistan Penal Code. The arrest warrants have been issued for all the 12 accused.
The SECP had received many complaints against them as they failed to comply with SECP directives to resolve complaints and to transfer shares into Central Depository Company accounts. Consequently, on June 26. 2009, SECP suspended their registration along with that of three other brokerage houses. The SECP appointed committees comprising officers from the SECP, KSE and Central depository Company (CDC) to look into the matters relating to unresolved complaints against the five brokers. Records revealed that they, without the clients’ consent, were transferring shares and pledging them with banks to obtain financing. The finances obtained through these actions were mostly used to liquidate liabilities of brokerage houses or its directors, their relatives and friends.
The SECP found that they and their bigwigs were also misusing powers given to them under CDC sub-account opening form, in moving or pledging the shares of their clients from their sub-accounts, resulting in a loss to their clients. Prudential Securities Limited, in addition to above, also transferred clients’ shares to its associated/group companies. Earlier, SECP had also filed similar criminal complaints against Capital One Equities Limited, Cliktrade Limited and Eastern Capital Limited. The copies of five enquiry reports and respective criminal complaints are available on the SECP website.
