SECP files criminal complaint against dubious frontmen

Author: inp

Based on an investigation conducted under the Securities Act, 2015, the Securities and Exchange Commission of Pakistan (SECP) has filed a criminal complaint against two individuals who were found involved in front-running equity trading by a large institutional investor during the period from October 1, 2021, to December 31, 2021.

The criminal complaint number 15 of 2024, dated April 8, 2024, has been filed at the Special Court (Offenses in Banks), Karachi.

The analysis of order-level data by SECP investigation team revealed that a day trader, with the active connivance of an investment officer of the institutional investor, purchased shares before the placement of buy orders by the institutional investor and subsequently sold those shares to the institutional investor. The practice continued for a few months.

A substantial portion of the trades executed by the day trader during this period matched with trades executed by institutional investor as a counter party. This resulted in losses to the institutional investor and gains to the day trader. There was strong evidence that the investment officer of the institutional investor was actively colluding with the day trader.

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