The Securities and Exchange Commission of Pakistan (SECP), along with the top management of Pakistan Stock Exchange (PSX) seem adamant on keeping mum over the recent scam worth more than Rs 1.5 billion. This is despite lodgement of 11 FIRs in Mithadar police station and FIA Corporate Crime Circles (CCC) against Wamiq Mohammad Yousaf, allegedly a front man of Zafar Moti Securities and Adam Securities.
FIA sources say that so far, around Rs 40 million have been recovered from Wamiq Yousaf during the investigation and this very same amount would soon be distributed among the complainants.
Background interviews with investors, brokers and officials aware of the developments, claim that regulatory bodies; PSX and the SECP are being influenced by a powerful lobby of brokers. This they say is evident from the regulator’s demeanour, lacking the necessary bite for taking action, regardless of several complaints lodged by numerous investors who lost millions of their hard-earned incomes and savings.
Such is the case of a woman aged 50, who was the sole breadwinner of her family. She was deprived of more than Rs 1.5 million worth of her savings, following her friend’s advice to trade with Wamiq Yousaf, a front man of Zafar Moti Securities.
In the initial meetings, Wamiq introduced her to Zafar Moti, claiming that she could be a major client. Resultantly, she met him with excitement assuming that her investment was safe with him.
Similarly, in October 2016, when the stock market was at its peak between 49,000-50,000 points, the Federal Investigation Agency (FIA) apprehended Wamiq in an alleged money-scam worth billions of rupees on a complaint lodged by six investors.
A source said he (Wamiq) was using KAT software (online stock trading platform) under the name of Zafar Moti securities, a renowned brokerage firm of the stock market. Zafar Moti is a key broker of the stock market in Pakistan and had been deputed as a board member (director PSX) in 2014, in addition to holding other key posts of the stock market in the last few years.
The woman, who had lost more than Rs 1.5 million in the money scam, says on the condition of anonymity, “What exactly are our regulators doing? A person has cheated the investors, gaining billions of rupees in the main stock exchange buildings and yet nobody can prove who he is working for?”
“He (Wamiq) must be using KAT, an online trading software of the stock market, and the PSX must allocate this software under the name of a broker of a brokerage house,” she said. “Why are the regulators hesitating to suspend the trading license of such brokerage houses?” she questioned. “Who is responsible for the money which I invested in the stock market, that too in the main building of the stock market,” she further inquired.
“Actually, all SECP and PSX officials are involved in it and now they are trying to ruin this case to save their own skin,” she remarked.
Following this incident in October 2016, the top management of PSX resorted to taking a notice based on the complaints filed by a few investors. Haroon Askari, Deputy Managing Director (DMD) PSX contacted Zafar Moti and Adam Securities, but both of them refused to accept the original receipts issued in favour of investors by their own agents.
Thereafter, more complaints were lodged, forcing Haroon Askari to take further action and shut down the offices of the broker under scrutiny. However, no action was taken against Wamiq Yousaf, who was allegedly trading illegally in the main stock building. Experts believe this inaction is to save the reputation of the stock market for the time being.
“The few investors who tried to contact the higher management of PSX were told that the PSX does not know any Wamiq Yousaf and questioned the investors in return as to why they handed over their money to Wamiq without any confirmation. (Wamiq has been working out of the same office for 20 years).
“SECP, FIA and PSX are still investigating the case and we will take strict action against these brokerage firms if they are found guilty,” said Nadeem Naqvi, Managing Director PSX in a meeting with Pakistan Today. He said that so far, the case has not been established against these brokerage firms as the case is still-under-investigation.
An FIA official, on condition of anonymity, said that Wamiq cheated over 100 investors before October 6, prior to being arrested in this case. The accused, mentioned in the FIR, managed to secure a pre-arrest bail from the courts. “Our investigating officer is digging in the case thoroughly,” he added.
After this scam, the PSX issued a press release whereby it was disclosed that some brokers and TRE certificate holders are involved in maintaining a double book, however, there was no mention of the names of the brokers and the TRE certificate holders being investigated. The SECP has also issued notices to more than 20 brokerage firms involved in Badla financing.
The sources at PSX said, “The SECP has authorised the management of PSX to take action on the issued notices and hear cases individually against them.”
In this regard, only two licenses of TRE certificate holders namely M/s AMCAP Securities (Pvt) Ltd and M/s Stock Vision were suspended over irregularities.
Earlier, PSX suspended M/s S Z Securities (Lahore), M R Securities (Lahore), AWJ Securities of Islamabad, MAM Securities (Lahore) and Stock Street Securities (Pvt) Islamabad in fraud cases and their investors were directed to contact PSX.
In May 2016, the PSX suspended the license of Stock Street Securities (Islamabad) but the investors of this brokerage house are still waiting to get their money back. In February 2017, NAB, with the help of SECP officials also raided MAM Securities and seized its equipment from their offices.
According to sources, more than ten Trading Right Entitlement Certificates (TREC) holders were suspended during March and April 2017, in which three TREC holders surrendered their licenses to the PSX management. The reason of surrendering their licenses, however, remains undisclosed.
Now, that a big fraud has been committed and Rs 1.5b- Rs 1.75b of the investors has been washed out, chairman SECP and top management of PSX are accusing the investors for trusting a fake broker by stating, “Wamiq was not a broker (TREC holder) and we cannot take responsibility for such an amount. Wamiq was issued his own book accounts by the SECP and he was dealing with Zafar Moti at the time. SECP had sent a warning letter to Wamiq at his home address in Nazimabad (Karachi).”
A PSX official on condition of anonymity said that Wamiq was using KAT software in the name of Zafar Moti Securities while 2-3 investors confirmed that they met with Zafar Moti in Wamiq’s office.
SECP’s officials hide Ali Jehangir of JS group in Azgard-9 insider trading case in 2013:
According to the National Accountability Bureau (NAB-Sindh) report, the SECP did not disclose the insider trading case against Ali Jehangir Siddiqui and National Banks in 2013, who were allegedly involved in insider trading in Azgard-9, and Agritech. The NAB-Sindh had submitted a detailed report to the NAB headquarters Islamabad, but there has been no reply until now.
In 2013, Transparency International Pakistan (TIP), in a letter to the then governor State Bank of Pakistan (SBP) had highlighted the serious allegation of insider trading against JS Bank Limited (JSBL), Jehangir Siddiqui Group of Companies (JS Group) and accused SBP officials of a collusion in protecting JS Bank.
In documents available with Pakistan Today, NAB demanded several documents from the SECP officials but the officials were unable to provide these documents to NAB.
Despite confirmation from the SECP of illegal insider trading by JS Bank in the shares of Azgard-9 which resulted in price manipulation of shares, the SBP has apparently taken no action against the accused bank for violating the SBP banking regulations.
An SECP official confirmed that allegations (against JSBL) are correct, the documents said and the regulator has initiated action against the individuals and companies involved in the illegal act, filing criminal cases in the court of law. So far, the SECP has lodged two criminal cases against employees of the renowned banks, but the employee alleged of insider trading is currently working with another TREC holder company.
During the digging of this news, several top brokers of the stock market were contacted for their comments but none of the brokers or SECP officials gave a clear statement against the PSX or in favour of the investors.
It was also emphasised that the investors and public should be cautious of these illegal activities in future and should not engage with, or be a party to, any such illegal investment activities, PSX’s MD said.
Zafar Hijazi, chairman SECP did not respond to any query, be it via SECP’s email address or his mobile phone.
