SECP sees AKD, Dawood brokers in insider trading

ISLAMABAD: A high-level expert committee of the Securities and Exchange Commission of Pakistan (SECP) sees the involvement of a leading stockbroker in insider trading in connection with the Rs120 billion Ogra scam.

According to sources, an expert committee constituted by the SECP chairman this month on the request of the National Accountability Bureau (NAB) concluded its findings after analysing the stock market data and other evidence that the AKD Group was prima facie involved in stock market manipulation, which caused huge losses to the national exchequer.

The committee has already submitted its report to NAB which is in the process of finalising the Ogra reference. Sources said the list of accused in the Ogra reference is likely to be expanded on the basis of SECP’s latest report.

The report, a copy of which is available with The News, recommends further investigation against the stock market manipulators by the NAB.
The names of a former prime minister, a former adviser for petroleum, former Ogra chief and top officials of SSGCL and SNGPL are already included in the list of accused in the Ogra scam that caused over Rs120 billion losses to the national exchequer through massive gas theft, illegal raise in UFG (unaccounted for gas) benchmark, stock market manipulation and illegal allocation of CNG stations.

The SECP committee was of the view that the brokers AKD Group and Dawood orchestrated a scheme in connivance with government institutions, including Oil and Gas Regulatory Authority (Ogra), National Bank of Pakistan (NBP), National Investment Trust (NIT), SSGCL and SNGPL, to dump their shareholding on the national institutions by creating a hoax of change in UFG (unaccounted for gas) benchmark.
During the tenure of Tauqeer Sadiq, Ogra had increased the UFG benchmark for gas companies in September-October 2010 only to be reverted in December 2010.

The change in UFG benchmark resulted in immediate raise in the prices of SNGPL and SSGCL shares, which created a golden opportunity for the AKD Group and Dawood brokers to sell their shares to national institutions like the NBP and NIT, causing losses worth billions to the national exchequer.

“The committee reviewed the trading data of the SSGC and SNGPL and observed that a small group of people was trading in connivance with each other and constituting major percentage of market turnover,” the report said.

According to the report, the trading pattern also reflected that the government institutions were the active buyers wherein the AKD Group, including its companies and family members, were the active sellers in the script of SSGC, while Dawood was playing the same role in the script of SNGPL.

The committee observed that data analysis had indicated “Insider-Trading”, a violation of Section 15 A of SEO 1969, where the AKD Group misused the information of the NBP trading, which was being carried out by the AKD brokerage house.

“The committee is of the view that prima facie it was a scheme through which majority of the shares were sold to the government institutions by executing pre-arranged transactions with the AKD Group. The majority of the group members were related to each other and it also appeared that some of the brokers were acting on behalf of the AKD Group,” the report says in its conclusion.

“The people responsible for decisions for purchase of SSGC and SNGPL shares need to be interrogated by an independent investigation agency such as NAB which is superior in terms of legal power and capacity to the commission,” the report recommends.

Sources said Acting Chairman of NAB, Admiral (retd) Saeed Ahmed Sargana would review the SECP report and Draft Ogra reference in the Bureau’s Executive Board Meeting (EBM), which is likely to be held within the next few days.

When contacted, a NAB spokesman confirmed that the draft Ogra reference had been received by the NAB chairman. However, he refused to comment further on the issue.The AKD and Dawood brokers have already rejected the charges against them as baseless, stating they would challenge the allegation in a court of law.