Pakistan court delivers first-ever conviction for insider trading
Insider trading refers to the practice of buying or selling a publicly traded company's securities while in possession of material information that is not yet public information. The SECP said it had filed a case against Zakir Hussain Somji, assistant vice president of investments at Habib Metropolitan Bank (HMB) Limited, after inspecting suspicious trading activity from Jan. 1, 2014, to Feb. 2, 2016.
The regulator said it was suspected that the accused, through his position at HMB, misused insider information related to the bank's investment and disinvestment decisions for personal gain. The SECP said a probe revealed Somji bought 11,795,100 shares of various companies, including 1,230,900 shares (10.43 percent) acquired from HMB. He sold 11,836,600 shares — 4,915,200 (41.52 percent) of which were sold back to HMB, earning an 'unlawful profit' of Rs2,866,646 [$10,116.39].
'Sindh Special Court (Offences in Banks) handed out first ever conviction for insider trading in the history of Pakistan in a case filed by The Securities and Exchange Commission of Pakistan (SECP),' the regulator said.
It said Somji had been convicted by the court on June 14 for violating provisions of Section 128 of the Securities Act, 2015, which related to insider trading.
The regulator said the court slapped Somji with a penalty of Rs 8,599,938 [$30,380] which was three times the 'unlawful gain.'
'The amount is to be deposited within seven days, failing which the convict will be remanded to jail until full payment is made,' the SECP said.
The regulator said the judgment reaffirms SECP's mandate to ensure market integrity and investor protection.
'It sets a strong precedent for future enforcement actions and sends a clear message that market abuse and regulatory violations shall not be tolerated,' it added.
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