The front regulators at the Karachi Stock Exchange (KSE) are suspecting foul play by the management of the National Refinery Limited (NRL) which first communicated erroneous financial results to the Exchange and then took hours to rectify the mistake.
The NRL management, on the other hand, has regretted the incident that Company Secretary Nouman Ahmed Usmani dubbed as a “purely human error”.
The KSE, however, has taken a strong exception to the hours-long delay the NRL made while communicating its correct financial results for the third quarter ending on March 31 this year.
The official documents reveal that the KSE is suspecting an element of “insider trading” during the April 16 trading session and has asked the company for an immediate explanation.
If they fail to ally the regulators’ concern, the NRL and its management would be facing a penalty ranging from Rs 100,000 to Rs 1 million under Listing Regulation No 16(3) and 16(4) of the Exchange.
According to an official narrative, the Refinery, at 12:27pm last Tuesday, sent its financial results to the Exchange with what the KSE called it a “major difference” in the company’s earnings and profitability.
Sensing what the company secretary termed as a human error, the NRL sent an amended version of its balance sheet to the Exchange at 3.46pm.
“It is regretted that… the amendments in the figures was communicated after the lapse of over three hours and after closure of trading hours,” said KSE’s Deputy General Manager Companies Affairs Muhammad Ghufran in an official communiqué to the NRL.
This, he apprehended, may lead to “an element of insider trading” for delay in communicating the correct financial results.
Asking for an explanation from the company, Ghufran said the NRL shares were one of the actively-traded issues on the KSE.
“Negligence on the part of the company while communicating such price sensitive material information is neither desirable nor in line with the Code of Corporate Governance applicable to all listed companies,” he said.
Additionally, he said, Listing Regulation No 16(3) and 16(4) of the Exchange required the listed firms to communicate their accurate and complete financial results and any other price sensitive information.
The issuers, he said, were also required to ensure timely communication of complete and accurate financial results and in case of non-compliance it was liable for action required therein.
In response, NRL’s Company Secretary Nouman Ahmed Usmani clarified that there were “malafide” or “deliberate” intentions on the part of his management. “This is purely a human error,” he added.
The secretary reminded the KSE that as soon as his side realized that a mistake had been occurred in communicating the results, it promptly sent the KSE a letter of factual information without waiting any communication from the regulator.
“Considering the seriousness of the matter and inconvenience caused to the investors we sincerely regret this incident,” he said.
The NRL assured the front regulators of having adopted sufficient corrective measure to avoid the recurrence of such errors.
