THE national airline, which is a listed company on the stock exchange, may not have filed any financial statements in the last two years for its shareholders as the law requires it to do, but it seems that its CEO is feeling increasingly free to give talks in different places and at different times touting the financial numbers that have not yet been audited and released. The policy board of the SECP has raised the flag that this could constitute criminal conduct designed to manipulate the market and that it needs to cease immediately. To support the very serious view that the policy board has taken of the matter, they mention trading data of PIA shares that they say sees a spike each time the CEO makes similarly casual remarks about the financial health of the company. What now needs closer examination — and the SECP has done this in the past where similar concerns existed — is to see if there is any trading taking place in PIA shares during one of these episodes by anyone with close links to the PIA top tier. Secondly, it should also be probed whether the latter has any interactions with stockbrokers who are seen trading PIA shares during these episodes.
For a publicly listed company to not file audited financial statements is a grave violation, especially if this practice has continued for two years, and along the way, trading in the company’s shares has been suspended. This is currently the situation at PIA. Under these circumstances, when no auditor has yet signed off on the company’s financial statements, the head would be required to show extreme discretion before discussing the financial health of his company in a public setting. Price manipulation through these kinds of practices has occurred in the past, and any company head taking their reputation, and the reputation of the management team they lead, seriously, would desist from giving the impression of being engaged in such an unethical exercise. For the head of a company, as large and as much in the public limelight as PIA is, to give the impression of indulging in price manipulation shows extreme irresponsibility. The possibility of an SECP probe that could involve more invasive scrutiny by the FIA to determine associations and interactions before, during and after these short price spikes, induced by the CEOs words, only strengthens this view.
Published in Dawn, November 19th, 2019