ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Wednesday issued a statement on its official Twitter handle, guiding capital market investors on the use of broker accounts. The post came as part of SECP’s investor education initiative.
The statement warned that if an investment is made in the name of someone other than the investor’s, it is not secure.
“The risk stems from the investor not being the legal owner of the money invested in someone else’s name. Such investment is also prone to fraud, especially without having Broker and CDC [Central Depository Company] accounts in an investor’s own name.”
SECP highlighted that the broker might also use the money for churning in the market for his own benefit. “Only legitimate owners and account holders can file claims in case of default of broker,” said the post, adding, “SECP will not entertain your complaint in case you traded through third-party accounts”.
Previously, SECP had also issued a set of guidelines for investors, advising them to always deal with licensed brokers registered with the commission. The respective post on social media had also warned investors of the risks associated with unlicensed brokers and noted that neither Pakistan Stock Exchange (PSX) nor SECP would entertain complaints arising out of dealings with unlicensed brokers.