LAHORE: The Securities and Exchange Commission of Pakistan (SECP) on Tuesday moved to seize all the back-office data of Lahore-based brokerage house M.R. Securities, whose owner reportedly disappeared several days ago with his investors’ cash and shares worth millions of rupees.
The SECP said that the brokerage house is the subject of an ongoing investigation by the regulator. And its owner, Mazhar Rafiq, went off the radar after he was asked to provide the firm’s back-office records.
A team of SECP investigators spent several hours on Tuesday at the office of the brokerage house to retrieve the required data.
‘I will pay every single paisa I owe,’ says owner of M.R. Securities
Its spokesman told Dawn over the phone from Islamabad that the commission was still not in a position to say anything concrete on the outcome of its investigations carried so far. “We may be able to say something tomorrow (after examining the seized record),” the spokesman said.
Reports suggest that the owner of the brokerage house closed down his office and vanished with his clients’ shares and cash in his custody at least a week ago.
Talking to Dawn from an undisclosed place, Mr Rafiq, who reportedly made himself “unavailable” to his clients and the regulatory authorities, contended that some “audit anomalies” had been found in his firm’s accounts ahead of takeover of the Pakistan stock exchange by the new Chinese management leading to reports of fraud and SECP investigations.
The audit anomalies “is not a big thing”, said the stockbroker, who is son-in-law of prominent businessman and real estate mogul Seth Abid. “I’m not running away. I will pay every single paisa I owe (to my investors) and I am cooperating in investigations.”
However, a press statement issued by the regulator on Tuesday night did not hint at any cooperation from the firm’s owner.
“The SECP has to use the full force of law against the stockbrokers who have absconded with the cash and securities of their clients,” the release quoted SECP chairman Zafar Hijazi as having said.
It said the commission held a lengthy meeting on Tuesday evening to review the situation arising out of the sudden closure of M.R. Securities.
The SECP also pledged to take action against the management of the Pakistan Stock Exchange who had failed to fulfill their responsibility in protecting investors. As the front-line regulator, the stock exchange bears responsibility to ensure that investors are not at risk of fraud by the broker, the regulator said.
The regulator took investors to task for lending money through this broker in off-system illegal badla financing.
The SECP chairman also ordered a complete review of the current system that allows all stockbrokers to hold custody of clients’ shares and cash.
Published in Dawn, February 8th, 2017