ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has reported MR Securities, the Lahore-based stockbroker involved in financial fraud, to international securities regulators through the International Organisation of Securities Commissions (IOSCO).
SECP has also urged the Financial Monitoring Unit to initiate action against the said broker under the Anti Money Laundering Act, 2010. There is a trend among Pakistani financial fraudsters to run abroad, assuming that they will not be on the radar of the securities’ regulator of the host jurisdiction. The owners of defaulting brokerage houses such as Ace Securities, Stock Street, and MR Securities are all believed to be hiding abroad.
The SECP’s reporting measures will help discourage securities’ fraud and tighten accountability of the culprits. “The SECP will continue to report to international regulators if any stockbroker found involved in securities fraud in Pakistan,” said SECP Chairman Zafar Hijazi. The SECP is a member of the IOSCO, the international body that brings together the world’s securities regulators and sets standards for the securities sector. Its members regulate more than 95 percent of the world’s securities markets in more than 115 jurisdictions. The SECP is approaching the IOSCO for information sharing on financial fraud under a multilateral memorandum of understanding (MoU), to which SECP is a signatory.
Earlier in a joint meeting, the SECP and the State Bank of Pakistan (SBP) voiced their concern over financial scams and frauds, including illegal deposit-taking. The two regulators resolved to pay special attention to such fraudulent activities by adopting a coordinated approach along with the cooperation of law enforcement agencies.
The SECP is also working on developing a mechanism for collecting market intelligence about potential financial scams in their incubation. The SECP shall develop this market intelligence mechanism in close cooperation with the SBP. This intelligence mechanism shall enable the regulators to act more proactively to minimise losses to unsuspecting investors. This market intelligence mechanism for detecting scams will be complemented by additional security measures against fraudsters after their cases have been detected and concluded.
Under these additional security measures, those involved in financial scams once will find it difficult to access financial services sector again without raising red flags, be it opening a bank account or taking an insurance policy. This is in line with international practices where individuals and companies found guilty of financial crime remain on the radar of the financial sector service providers.
