ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has reported a Lahore-based stockbroker M R Securities alleged involved in a financial fraud, to international securities regulators through the International Organisation of Securities Commissions (IOSCO).
The brokerage house has also been reported to the Financial Monitoring Unit to initiate action under the Anti Money Laundering Act, 2010.
“There is a trend among Pakistani financial fraudsters to run abroad, assuming that they will not be on the radar of the securities’ regulator of the host jurisdiction,” the statement read. The owners of defaulting brokerage houses such as Ace Securities, Stock Street, and M R Securities are all believed to be hiding abroad, said a SECP statement.
The statement added that the SECP’s reporting measures would help discourage securities’ fraud and tighten accountability. “The SECP will continue to report to international regulators any stockbroker found involved in securities fraud in Pakistan,” said SECP Chairman Zafar Hijazi.
The SECP is a member of the IOSCO, the international body that brings together the world’s securities regulators and sets standards for the securities sector. Its members regulate more than 95% of the world’s securities markets in more than 115 jurisdictions. The SECP is approaching the IOSCO for such information sharing on financial fraud under a multilateral memorandum of understanding to which SECP is a signatory.
Earlier in a joint meeting, the SECP and the State Bank of Pakistan (SBP) voiced their concern over financial scams and frauds, including illegal deposit taking. The two regulators resolved to pay special attention to such fraudulent activities by adopting a coordinated approach along with the cooperation of law enforcement agencies. “The SECP is also working on developing a mechanism for collecting market intelligence about potential financial scams in their incubation. The SECP shall develop this market intelligence mechanism in close cooperation with the SBP. This intelligence mechanism shall enable the regulators to act more proactively to minimise losses to unsuspecting investors.”
This market intelligence mechanism for detecting scams will be complemented by additional security measures against fraudsters after their cases have been detected and concluded.
Under these additional security measures, those involved in financial scams will find it difficult to access financial services sector again without raising red flags, be it opening a bank account or taking an insurance policy. This is in line with international practices where individuals and companies found guilty of financial crime remain on the radar of the financial sector service providers.
Meanwhile, the SECP registered 854 companies in February 2017. The number of companies registered with the SECP during February 2017 has exhibited a remarkable growth of 71% over the corresponding month of the last year. Over a larger horizon, the number of companies incorporated during first eight months of financial year 2016-17 has witnessed an impressive growth of 34% over the preceding year, thanks to the wide-ranging reform measures undertaken by the SECP.
A multi-pronged strategy has also been adopted to further encourage corporatisation in the country, comprising legislative reforms, increasing adoption of information and communication technologies, simplification of administrative procedures, and investor awareness and facilitation measures.
Around 85 percent companies have been registered as private limited companies, while around 12 percent companies were registered as single member companies. Three percent of the companies were registered as public unlisted, association’s not-for-profit, trade organizations and foreign companies.
During the month, the highest numbers of companies, 303, were registered at the Company Registration Office (CRO), Islamabad, followed by 256 and 180 companies registered at CRO Lahore and Karachi, respectively. The CROs in Peshawar, Multan, Faisalabad, Quetta? Sukkur and Gilgit registered 35, 36, 23, 10 and 3 and 8 companies, respectively.
