Law: Securities and Exchange Ordinance, 1969

Section: 6,16,18,22

Law: Securities and Exchange Commission Rules, 1971

Section: ThirdSched.

Law: Central Depositories Act, 1997

Section: 24,28

Law: Stock Exchange Members (Inspection of Books and Record) Rules, 2001

Section: 3,4

Sections 24, 28 Mishandling securities of the clients by the company. Irregularities in calculation of "Net Capital Balance" (N.C.B.). Imposition of late payment charges on the client. Company had pledged the shares with the banks, without authorization, in sheer violation of S.24 of the Central Depositories Act, 1997. Report submitted by Inspection Team, disclosed that company was mishandling the securities of its clients; and was involved in imposing late payment charges on the clients. Major irregularities in calculation of "Net Capital Balance" (N.C.B.) was also observed; and it appeared that "N.C.B." was not in accordance with the Third Sched. of Securities and Exchange Rules, 1971. Director (M.S.R.D.) of the Commission, dissatisfied with the response of company to the show-cause notice, held that it was established that in many instances, company had pledged the shares without proper authority of the sub-account holders---Group accounts, though were abolished in 2005, company, did not take serious measures to transfer the securities to the respective sub-accounts. Such mishandling of client's securities, was a clear violation of S.24 of Central Depositories Act, 1997, which was punishable under S.28 of the said Act. Company was directed to deposit a sum of Rs.100,000 under S.22 of Securities and Exchange Ordinance, 1969; and further sum of Rs.300,000 under S.28 of Central Depositories Act, 1997, to the Commission by way of penalty; and ensure full compliance with the Ordinance, Rules, Regulations and directives of the Commission in future. Company had admitted its default by depositing penalty of Rs.55,000 imposed by Central Depositories Act, 1997. Company, could not be reprimanded for the same offence twice Penalty of Rs.300,000 imposed under S.28 of Central Depositories Act, 1997, was set aside by Appellate Bench and held that company being in breach of Brokers Rules, must pay penalty of Rs.100,000 under S.22 of Securities and Exchange Ordinance, 1969. THIS ORDER PASSED BY: TAHIR MAHMOOD, COMMISSIONER (CLD):---.--- 1. This order is in Appeal No. 27 of 2013 filed under section 33 of the Securities and Exchange Commission of Pakistan Act (the…

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