Law:

Section:

Securities and Exchange Ordinance (XVII of 1969)------- --------S. 22-------Brokers and Agents Registration Rules, 2001, Rr.8(iv)(b) & 12, Third Sched., Code of Conduct, Cls.A(2) & A(5)-------"Blank sale"-------Broker company's inter exchange client, had engaged in setting and squaring up his position in different scrips-------Commission, sought clarification regarding short sales in different scrips, executed by said client through the broker-------Response of the broker, was not satisfactory as it did not contain any evidence and justification regarding execution of said sales by its client-------Commission, in exercise of its power under S.22 of the Securities and Exchange Ordinance, 1969, imposed a penalty of Rs.100,000 on the broker, with strong advice to take immediate measures; and put in place proper system; and check to eliminate the occurrence of such instances in future-------'Blank sale' would mean "a sale by a party that did not own shares, or the sale did not constitute a sale with pre-existing interest; or was sale by a party that had not entered into a contractual borrowing arrangement to meet delivery requirements"-------Sale by the broker, without pre-existing interest in the client's account, would fall within the ambit of "blank sale" which was prohibited-------Broker was responsible to monitor all trading activities, being carried out through its brokerage house-------'Code of Conduct', prescribed in the Third Schedule of the Brokers and Agents Registration Rules, 2001, with its R.12, had prohibited interference with the fair and smooth functioning of market-------Contention that said violations were a result of ignorance and not fraud, could not suffice-------Broker had not been alleged to have benefited by indulging in said transactions, but had failed to act with due skill, care and diligence in the conduct of its business and acted in violation of Rr.8(iv) and 12 of the Brokers and Agents Registration Rules, 2001-------Unfair trade practices like 'wash trades", were harmful for the development of market-------Commission was bound to protect the interest of investors; and in doing so it had been empowered to deal with elements,…

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