Islamabad: The Securities and Exchange Commission of Pakistan (SECP) has approved a formal referral to the Federal Investigation Agency (FIA) to pursue legal action in the Bagasra Securities case, more than 16 years after the brokerage ceased operations, with nearly Rs 49 million in approved investor claims still unpaid.
The approval allows a written reference under Section 41B of the SECP Act, 1997, enabling FIA to initiate formal proceedings over alleged unauthorised transfers and pledging of clients’ shares, said a news release.
The referral names Sikandar Esmail Ahmed (Director/CEO), Shakeela Sikandar (Director), and Arshad Iqbal Advocate (Liquidator) as accused in the matter.
SECP initiated an enquiry in March 2010 following complaints concerning unauthorised dealings in clients’ securities. SECP’s enquiry, completed in October 2013, found that clients’ shares were transferred and pledged without consent to obtain financing and meet exposure margins.
The funds were used to benefit selected clients at the expense of others.
A total of 176.204 million shares, including clients’ holdings, were pledged between July 2007 and March 2010. Banks and the stock exchange subsequently exercised pledge calls, resulting in the sale of pledged shares following default.
The report also recorded that the brokerage’s directors and liquidator failed to provide required records, leaving the enquiry committee to rely on information obtained from CDC, PSX and banks.
NCCPL declared the brokerage a defaulter, while PSX sold its membership card in 2009 and undertook claim settlements. The company ceased operations following a voluntary winding-up resolution in January 2010.
PSX verified 333 investor claims worth Rs 145.50 million, of which Rs 96.57 million was settled, including Rs 75 million through the Investors Protection Fund. Claims worth Rs48.93 million remain outstanding.
SECP’s support for FIA’s proceedings is intended to help pursue recovery towards settling investor claims that have remained unpaid for more than 16 years.