ISLAMABAD, Dec 20: The Securities and Exchange Commission (SECP) on Wednesday said the Karachi Stock Exchange (KSE) had been unable to preserve the shares transaction data leading to the March 2005 market crash because of a lack of storage capacity, thus deleting all proofs that could have identified those responsible for the market’s crash.
The commission also refuted a statement of its former chairman, Dr Tariq Hassan, who told the National Assembly’s Standing Committee on Finance on Dec 14 that the commission had with it a complete data of transactions during his tenure. Dr Hassan had also said the vital data disappeared after he left the SECP.
Razi-ur-Rehman, the sitting chairman of the SECP, said at a news conference in Karachi on Wednesday that Dr Hassan’s `claim’ about the missing data `was totally incorrect and without any factual basis’.
He also termed misleading media reports about data disappearance. The reports were based on the National Assembly Standing Committee’s proceedings and the parliament has a complete record of speeches.
Mr Rehman said unusual activity was witnessed at the KSE in March last year and thereafter the exchange was directed by the SECP to provide a complete data, including a statement of orders (bid and offer) along with a transcript of correspondence during the first four months of 2005.
However, the KSE provided data relating to executed trades only. It gave no explanation for not giving the statement of bids and offers, Mr Razi said.
The chairman said acting on a recommendation of the Task Force to conduct a forensic investigation, the SECP once again directed the KSE in August last year to provide a complete trading record of activities carried out at the exchange from January to April.
The KSE complied with the directive, providing the executed trade data. However, about the bid and offer data, the KSE managing director said that the exchange did not have a capacity to store data regarding bids and offers made. “This note confirms that the KSE only had a year-wise data of executed trades for five years and that the exchange simply did not have resources to store records of bid and offer,” Mr Rehman said.
He said the KSE managing director’s note showed the management had proposed to the board to develop an independent data warehousing capacity for recording all transactions.
The SECP chairman also justified the appointment of Diligence, a US firm, for conducting forensic probe into the crash, observing that the firm was appointed on the recommendations of Dr Tariq Hassan and the commission.
Dr Hassan told the NA Standing Committee that he had recommended Diligence after he found that Pakistani brokers had links with the four biggest firms of not only Pakistan but of the world. He said he had recommended Diligence because a number of distinguished names were working for it. However, Mr Razi-ur-Rahman admitted, he learned later that the officials concerned were not part of the team that conducted the forensic probe.
He said the SECP had approached a former NAB official, considered an expert in forensic investigations, for the assignment, but he rejected the offer.
