SECP Approves FIA Referral in Bagasra Securities Case

ISLAMABAD: (News Desk) –  The Securities and Exchange Commission of Pakistan (SECP) has approved a formal referral of the Bagasra Securities case to the Federal Investigation Agency (FIA), more than 16 years after the brokerage stopped operating, with investor claims worth nearly Rs49 million still outstanding.

The approval allows SECP to submit a written reference under Section 41B of the SECP Act, 1997, seeking legal action over alleged unauthorised transfers and pledging of clients’ shares.

The reference names Sikandar Esmail Ahmed, director and CEO; Shakeela Sikandar, director; and Arshad Iqbal, advocate and liquidator, as accused in the case.

The SECP launched an enquiry in March 2010 after receiving complaints regarding alleged unauthorised dealings in clients’ securities. The enquiry, completed in October 2013, found that shares belonging to clients had allegedly been transferred and pledged without their consent to secure financing and meet exposure-margin requirements.

According to the enquiry findings, the funds were used to benefit certain clients at the expense of others.

Between July 2007 and March 2010, a total of 176.204 million shares, including clients’ holdings, were pledged. After defaults, banks and the stock exchange exercised pledge calls, resulting in the sale of the pledged shares.

The enquiry report also noted that the brokerage’s directors and liquidator failed to provide the required records. As a result, the enquiry committee relied on information obtained from the Central Depository Company (CDC), Pakistan Stock Exchange (PSX) and banks.

The National Clearing Company of Pakistan Limited (NCCPL) declared the brokerage a defaulter, while PSX sold its membership card in 2009 and proceeded with the settlement of investor claims. The brokerage subsequently ceased operations after approving a voluntary winding-up resolution in January 2010.

PSX verified 333 investor claims amounting to Rs145.50 million. Of these, Rs96.57 million has been settled, including Rs75 million paid through the Investors Protection Fund, while claims worth Rs48.93 million remain unpaid.

The SECP said its support for FIA proceedings would help pursue recovery and facilitate the settlement of investor claims that have remained outstanding for more than 16 years.