Law:

Section:

Securities and Exchange Ordinance (XVII of 1969)-------Ss.6 & 22---Brokers and Agents Registration Rules, 2001, R.8---Stock Exchange Members (Inspection of Books and Record) Rules, 2001, Rr.3, 4 & 7---Irregularities in calculation of "Net Capital Balance (NCB)"---Inspection team, duly constituted, in its report had pointed out irregularities in calculation of 'Net Capital Balance (NCB)' by the broker company---"Net Capital Certificate" was not in accordance with the Third Schedule of the Securities and Exchange Rules, 1971---Company had failed to properly maintain segregation of its client's assets and to prepare KYC and CDD Policy in a timely manner---Company, therefore, was involved in the imposition of late payment charges---Segregation of clients' assets was of paramount importance for the protection of investors' interest---Company being the custodian of clients' assets was expected to comply with the applicable regulatory framework in letter and spirit---Penalty of Rs.25,000 was imposed on the company with further directions; that the company would comply with Rules and guidelines issued in letter and spirit; to ensure segregation of clients' assets, maintain separate bank account for the clients' funds and use that one account solely for the purpose of client's funds. Kamran Shahzad, Director and Muhammad Faisal, Manager Operations representing Fairtrade Capital Securities (Pvt.) Limited. ORDER IMRAN INAYAT BUTT, DIRECTOR/HOD (MSRD).---This Order shall dispose of the proceedings initiated through Show Cause Notice bearing No. 1(27) SMD/MSRD/C&IW/2014 dated April 29, 2014 ("SCN") served to Fairtrade Capital Securities (Private) Limited ("Respondent"), Trading Right Entitlement Certificate Holder/Broker of the Karachi Stock Exchange Limited ("KSE") by the Securities and Exchange Commission of Pakistan ("Commission") under section 22 of the Securities and Exchange Ordinance, 1969 ("Ordinance") read with Rule 8 of the Brokers and Agents Registration Rules, 2001 ("Brokers Rules"). 2. Brief facts of the case are that the Commission in exercise of its powers under subsection (1) of section 6 of the Ordinance read with Rule 3 and Rule 4 of the Stock…

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