Though it was a bit late to act, government finally has placed the names of five suspended members of Karachi Stock Exchange (KSE) on Exit Control List (ECL).
Ministry of Interior placed these suspended members on ECL on the recommendation of Securities & Exchange Commission of Pakistan (SECP), sources told Daily Times on Thursday.
However, the action taken by the government with regard to these suspended members was of little use as two of these members have already flown out of the country; one reportedly in Europe and other in Singapore.
Though sources in SECP termed the placement of the names of suspended members on ECL to safeguard the interests of investors whose hard-earned money is at risk due to inability of these members to pay-off their liabilities, market participants said that apex regulator acted late and it should have taken this step once the membership of these brokers was suspended on June 30, 2009.
SECP took the action after failure of these members to give a specific timeframe to clear their liabilities and any concrete action plan to for the resolution of outstanding investors’ claims. Upon which, by using the regulatory powers, apex regulator issued orders for the suspension of registration of the said brokers. The suspended securities are Eastern Securities, Prudential Securities, Capital One Securities, MKA Securities and Click Securities. The owners of two brokerage firms that owed the majority of default amount are out of the country now.
Although, the working is underway to calculate the exact amount of defaulted amount of these companies, the varying estimates put the amount around Rs 1.5 billion with the Rs 630 million defaulted amount owed by those two firms whose owners left the country.
The default committee of KSE has given August 12, 2009 as the final deadline to these suspended brokerage houses to pay off the defaulted amount, otherwise their cards would be auctioned.
At the time of suspension of their membership SECP declared that the registration of the above-mentioned brokerage houses would remain suspended, in the public interest and for the protection of investors and to preserve capital market integrity, till claims against them in light of the investors complaints are ascertained and settled.
According to a director of KSE, these suspended members should not only be put on ECL but also should be blacklisted because they have breached the confidence of investors. He was critical of the way SECP handled the issue and said that action should have been taken since the launch of the inquiry against these members.
Ministry of Interior placed these suspended members on ECL on the recommendation of Securities & Exchange Commission of Pakistan (SECP), sources told Daily Times on Thursday.
However, the action taken by the government with regard to these suspended members was of little use as two of these members have already flown out of the country; one reportedly in Europe and other in Singapore.
Though sources in SECP termed the placement of the names of suspended members on ECL to safeguard the interests of investors whose hard-earned money is at risk due to inability of these members to pay-off their liabilities, market participants said that apex regulator acted late and it should have taken this step once the membership of these brokers was suspended on June 30, 2009.
SECP took the action after failure of these members to give a specific timeframe to clear their liabilities and any concrete action plan to for the resolution of outstanding investors’ claims. Upon which, by using the regulatory powers, apex regulator issued orders for the suspension of registration of the said brokers. The suspended securities are Eastern Securities, Prudential Securities, Capital One Securities, MKA Securities and Click Securities. The owners of two brokerage firms that owed the majority of default amount are out of the country now.
Although, the working is underway to calculate the exact amount of defaulted amount of these companies, the varying estimates put the amount around Rs 1.5 billion with the Rs 630 million defaulted amount owed by those two firms whose owners left the country.
The default committee of KSE has given August 12, 2009 as the final deadline to these suspended brokerage houses to pay off the defaulted amount, otherwise their cards would be auctioned.
At the time of suspension of their membership SECP declared that the registration of the above-mentioned brokerage houses would remain suspended, in the public interest and for the protection of investors and to preserve capital market integrity, till claims against them in light of the investors complaints are ascertained and settled.
According to a director of KSE, these suspended members should not only be put on ECL but also should be blacklisted because they have breached the confidence of investors. He was critical of the way SECP handled the issue and said that action should have been taken since the launch of the inquiry against these members.
Comments