By Staff Reporter
ISLAMABAD: Pakistan’s securities regulator has secured the country’s first-ever conviction against a bank executive for insider trading, a move that could strengthen trust in its capital markets and signal tougher oversight ahead.
The Sindh Special Court (Offences in Banks) on June 14 convicted Zakir Hussain Somji, an assistant vice president in the investments division at Habib Metropolitan Bank Ltd., for violating insider trading rules under Section 128 of the Securities Act, 2015, according to a statement from the Securities and Exchange Commission of Pakistan (SECP).
Somji was ordered to pay a penalty of Rs8.6 million, three times the profit he reaped from the illegal trades.
“The judgement will boost investor confidence in Pakistan’s capital markets and, in turn, facilitate capital formation,” SECP Chairman Akif Saeed said in the statement.
He added that the ruling could set a precedent for pending cases and ongoing probes into insider trading and market manipulation, underscoring the regulator’s resolve to clean up the financial system.
The conviction marks a turning point for Pakistan, where lax enforcement has long fueled concerns about market integrity. It’s a rare win for the SECP, which has been working to shed the country’s reputation as a risky bet for investors wary of governance gaps.
The case kicked off with a red flag from the SECP’s surveillance team. An analysis of trading data from the Karachi Automated Trading System (KATS) between January 1, 2014, and February 2, 2016, uncovered suspicious activity tied to Somji. As an insider at Habib Metropolitan Bank, he allegedly exploited non-public information about the bank’s investment moves to cash in for himself.
The SECP found that Somji bought 11.8 million shares of various companies, including 1.23 million shares, about 10.4% of his total purchases, directly from the bank. He then sold 11.84 million shares, with 4.92 million, or 41.5%, flipped back to Habib Metropolitan. The trades netted him an unlawful profit of 2.87 million rupees.
After digging into the transactions, the SECP filed a formal complaint under Section 128, with penalties outlined in Section 159 of the Securities Act. A full trial followed, pitting the regulator’s special prosecutors against Somji’s defence. On June 14, the court sided with the SECP, slapping Somji with the 8.6 million-rupee fine. He has seven days to pay up, or face jail time until the amount is settled.
“The judgment affirms SECP’s mandate to ensure market integrity and investor protection,” the statement said. “It sets a strong precedent for future enforcement actions and sends a clear message that market abuse and regulatory violations shall not be tolerated.”
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