Official sources told Business Recorder on Tuesday that the SECP has unearthed a case of insider trading involving an official of a petroleum company, who illegally disclosed inside information about the impending financial results of the company and the confidential information was unlawfully used for trading of shares at the stock market.
As a part of stringent surveillance practices to curb unfair market practices and to bring transparency in the market, the SECP has recently passed two orders for insider trading.
As per SECP orders, Pakistan Petroleum Provident Fund Trust Company (Pvt) Limited is a private limited company which manages the funds of the employees of the Pakistan Petroleum Limited. The perusal of trading data of Karachi Stock Exchange Limited from August 7, 2012 to August 9, 2012, transpired that Pakistan Petroleum Limited Senior Provident Fund managed by PPPFTCL bought 662,500 shares of PPL just few days prior to announcement of financial results of the PPL for the year ended June 30, 2012. The matter was taken up with PPL and subsequently show cause notices were issued to PPPFTCL and employees of PPL on suspected insider trading in the scrip of PPL. The review of documents provided by the respondents revealed that the Investment Committee of the PPPFTCL approved and recommended the buying of PPL shares to the Trustees of the Senior Provident Fund which gave its final approval in the said investment in the shares of PPL.
From the facts of the subject case, it was established that one member of the Investment Committee of PPPFTCL by virtue of being Head of the Finance Department of PPL, ie, General Manager (Finance)/Chief Financial Officer, was insider person and due to his position in PPL he was in possession of material information regarding financial results/performance of the PPL.
The case of insider trading against PPPFTCL and the employee of PPL was established on the basis of preponderance of evidence and material on record. The Commission vide Orders dated November 30, 2012 charged Chief Financial Officer of the PPL with illegally passing on/disclosing of inside information about the impending financial results of the PPL to the PPPFTCL which traded on that confidential information unlawfully, the official added.