Law:

Section:

Securities and Exchange Ordinance (XVII of 1969)-------Ss. 6 & 22---Securities and Exchange Rules, 1971, Third Schedule---Stock Exchange Members (Inspection of Books and Record) Rules, 2001, Rr.3 & 4---Violation regarding calculation of "Net Capital Balance ('NCB')" etc.---Securities and Exchange Commission ordered an inspection of the books and records required to be maintained by the company---On review of the inspection report, various prima facie violations regarding calculation of "Net Capital Balance", recovery of late payment charges and segregation of client's account were observed---Company's justification regarding 'Net Capital Balance' was not tenable---Company had accepted the violation of charging late payment charges; and non-maintenance of separate bank accounts for the clients---Company which had failed to provide any documentary evidence in support of pledging of client's securities, was found guilty of the non-compliance---Commission in exercise of powers under S.22 of Securities and Exchange Ordinance, 1969, imposed a penalty of Rs.500,000 (Rupees Five hundred thousand only) on the company---Company was further directed to; (i) discontinue the practice of keeping client's securities in its House Account, and transfer such securities to respective sub-accounts; (ii) discontinue the practice of transferring/pledging client's securities; (iii) properly maintain separate bank accounts for the clients and deposit the proceeds of client's trading in the same; (iv) regularize its "Net Capital Balance", in line with the requirements of Third Schedule of the Securities and Exchange Rules, 1971 and (v) discontinue the practice of charging the late payment charges to the clients. Muhammad Javed Muhammad Ibrahim and Naveed Yaqoob, Authorized Representatives of Messrs Zafar Moti Capital Securities (Pvt.) Limited present at hearing. ORDER HASNAT AHMAD, DIRECTOR (MSRD).---This Order shall dispose of the proceedings initiated through a Show Cause Notice No.4/BRK-14/SE/SMD/01 dated April 24, 2013 ("the SCN") issued to Messrs Zafar Moti Capital Securities (Pvt.) Limited ("the Respondent") under section 22 of the Securities and Exchange Ordinance, 1969…

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