Bagasra Securities case sent to FIA

Dawn reported that the SECP has cleared a written reference of the Bagasra Securities matter to the Federal Investigation Agency, more than sixteen years after the firm stopped operating. The move rests on Section 41B of the SECP Act, 1997, which enables the FIA to begin formal proceedings over alleged transfers and pledges of client shares made without authority. Investor claims worth nearly Rs49 million that were approved remain outstanding.

The regulator has forwarded the names of Sikandar Esmail Ahmed, a director and chief executive; Shakeela Sikandar, a director; and Arshad Iqbal, an advocate and liquidator, to the FIA as accused. The probe was opened in March 2010 after complaints about dealings in client securities that lacked authorisation, and it ended in October 2013. Investigators concluded that shares of clients were moved and pledged without consent to raise funds and cover margins, and the money benefited some clients at others' expense.

Between July 2007 and March 2010, a total of 176.2 million shares, client holdings among them, were used as pledges. After defaults, banks and the stock exchange invoked pledge calls, which led to the pledged shares being sold. The inquiry also noted that the directors and liquidator did not provide the required records, so the committee depended on information from the Central Depository Company, the Pakistan Stock Exchange and banks.