ISLAMABAD, May 3: The National Assembly’s Standing Committee on Finance on Thursday termed the forensic probe conducted by a United States firm into the March 2005 Karachi stock market crash a sham investigation and decided to consult parliament for reinvestigating the alleged scam.

The committee will finalise its recommendations for parliament by the end of the current month.

According to sources, the recommendations may include undoing all the share transactions which took place during the 30 days preceding the market crash and tightening the noose around about a dozen people involved in the episode.

Some members of the committee said that in 1919-20, the US government had undone the share transaction in a similar crash, which could be followed as a precedent.

The recommendations may include referring the case to the National Accountability Bureau (NAB) or the Federal Investigation Agency, while the last resort can be the Supreme Court.

The committee has shown lack of confidence in the investigation conducted by the US firm, Diligence, while the SECP recently cleared brokers of the charges of market manipulation on the basis of the report. The firm was paid $1 million for the investigation.

The SECP officials attending the committee’s meeting remained silent when asked by a member, Kashmala Tariq, how many of the Karachi Stock Exchange officials accused of not maintaining vital data or in other matters related to the crash were at present serving in the commission or had served there.

Ms Tariq reminded them that Zafar Abdullah, who was head of operations in the KSE in March 2005, was now serving as Executive Director, Securities Market, in the SECP. Shahid Ghaffar, who was KSE managing director at the time, had also later served as commissioner in the SECP, another member pointed out.

The committee’s members were of the view that some influential brokers and officials of the finance ministry had manipulated the stock market allegedly in connivance with some KSE officials and then appointed them in the SECP on top posts to ensure that they were not punished.