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Misleading Opinions Inducing General Public for Stock Trading

The Securities and Exchange Commission of Pakistan (SECP) has observed that some capital market individuals are using the print/electronic/social media for giving their views/ opinions to induce the general public to trade on the stock exchange. These persons are neither qualified nor possess the requisite expertise/skill to furnish such opinions. As these views are not supported by any research and data, it encourages rumors that affect the overall investment sentiments.

Misleading views of few individuals tantamount to inducing public, based on deceptive information, for investing in securities. Any such said activity by any person is prohibited in terms of Securities Act, 2015, the framework governing stock market trading.
  
While SECP encourages conducive regulatory environment for sustainable growth of capital markets, it is also responsible to maintain integrity and efficiency of the stock market. SECP is closely monitoring the market activities on regular basis. As a result of SECP vigilance, several criminal complaints have been filed against individuals/entities who were involved in market abuses. Moreover, SECP has also issued prohibitory orders in case of few individuals and leading institutional investors to curb the malpractices and maintain investors’ confidence. A limited scope thematic review of volume generating brokerage houses is being initiated to check their compliance status with regulatory frame governing permissible mode of financing stock investments.

Considering the legal framework, all persons including the market professionals are advised to be careful while giving any opinion through print/electronic/social media as the same may affect securities trading decision of general public/investors. In future, dissemination of any misleading/distorted news/statement may attract the punitive action in terms of Securities Act, 2015. SECP would implement zero tolerance policy while protecting the interest of investors/general public.
Apart from above, some executives and directors of listed companies are also disclosing company’s price sensitive information, including its operational and performance related information, through media without prior dissemination of the same by the company to the general public through Pakistan Stock Exchange (PSX). Furthermore, it has also been observed that the listed companies are not promptly responding to any news appearing in media that may affect the opinion of investors. To address this issue, SECP has issued necessary directions to PSX.

SECP expects media to play its due role to ensure dissemination of only credible information to the general public.
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