ISLAMABAD, Dec 4: The Securities and Exchange Commission of Pakistan (SECP) has uncovered yet another case of insider trading at the Karachi Stock Exchange (KSE).
The SECP has issued two orders for insider trading against Pakistan Petroleum Provident Fund Trust Company Limited (PPPFTCL) and one of the employees of PPL.
The regulator has imposed a cumulative penalty of Rs1.5m on account of insider trading.
“It is part of stringent surveillance practices to cut unfair market practices and to bring transparency in the market,” said an official of the SECP.
The case was traced during a routine check of the market activity after the closing of trade by SECP officials.
“Like earlier cases, this case of insider trading was unearthed on speculative evidence that was further probed,” the SECP official informed.
The Pakistan Petroleum Provident Fund Trust Company (Pvt.) Limited is a private limited company which manages funds of the employees of the PPL.
The SECP order said that trading data of Karachi Stock Exchange from Aug 7 to Aug 9 transpired that Pakistan Petroleum Limited Senior Provident Fund managed by the trust bought 662,500 shares of the PPL just few days prior to the announcement of financial results of the PPL for the year ended June 30.
The matter was taken up with PPL and show-cause notices were issued to the trust and employees of PPL on suspected insider trading in the scrip of PPL.
The review of documents, provided by the respondents, revealed that the investment committee of the trust approved and recommended buying of PPL shares to the trustees of the Senior Provident Fund which gave its final approval in the said investment in the shares of PPL.
The SECP enquiry established that one member of the Investment Committee of PPPFTCL by virtue of being head of the finance department of PPL who is the General Manager Finance (Chief Financial Officer), was an insider person.
“Due to his position in PPL, the said official was in possession of material information regarding financial results and the performance of the company,” the SECP official said, adding that the case of insider trading against the PPPFTCL and the employee of PPL was established on the basis of preponderance of evidence and material on record.
The commission vide orders dated Nov 30 charged CFO with illegally passing on and disclosing of inside information about the impending financial results of the PPL to the trust which traded on that confidential information unlawfully. The official said that as the market is growing there is need for higher degree of monitoring to maintain ethical practices in the stock market.