Based on an investigation conducted under the Securities Act, 2015, the Securities and Exchange Commission of Pakistan (SECP) has filed a criminal complaint at the Special Court (Offenses in Banks), Karachi.
The SECP said in a press statement that criminal complaint number 15 of 2024 dated April 8, 2024, has been filed against two individuals who were found involved in front running vis-à-vis equity trading by a large institutional investor during the period from October 1, 2021 to December 31, 2021.
The analysis of order-level data by the SECP investigation team revealed that a day trader, with the active connivance of an investment officer of the institutional investor, purchased shares before the placement of buy orders by the institutional investor and subsequently sold those shares to the institutional investor, the statement said.
The practice continued for a few months. A substantial portion of the trades executed by the day trader during this period matched with trades executed by institutional investor as a counterparty, it added.
This resulted in losses to the institutional investor and gains to the day trader. There is strong evidence that the investment officer of the institutional investor was actively colluding with the day trader, the SECP said.
SECP said that it is committed to ensuring fairness and transparency in the capital market to enhance investors’ confidence.
