SECP to Take Punitive Action Against Misleading Capital Market Individuals

In a statement by the Securities and Exchange Commission of Pakistan (SECP), the apex regulator noted 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.

SECP said that it encourages a conducive regulatory environment for the sustainable growth of capital markets and it is also responsible for maintaining the integrity and efficiency of the stock market. It is closely monitoring market activities on a regular basis. As a result of SECP’s vigilance, several criminal complaints have been filed against individuals/entities who were involved in abusing the market.

The apex regulator has also issued prohibitory orders for some individuals and leading institutional investors to curb the malpractices and maintain investors’ confidence. A limited thematic review of volume generating brokerage houses is being initiated to check their compliance status with the regulatory framework governing the permissible mode of financing stock investments.

Considering the legal framework, SECP warned all persons including the market professionals and advised them to be careful while sharing an opinion through print/electronic/social media as it may affect the securities trading decision of general public/investors.

The statement further read that in the future, the dissemination of any misleading/distorted news/statement will see punitive action, based on the Securities Act 2015. SECP will implement a zero-tolerance policy while protecting the interest of investors/general public.

The commission noted that some executives and directors of listed companies are also disclosing the company’s price-sensitive information, including its operational and performance-related information through the media without prior dissemination to the general public through Pakistan Stock Exchange (PSX).

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 also expects the media to play its part to ensure the dissemination of credible information to the general public.