Karachi: The Securities and Exchange Commission of Pakistan (SECP) has opposed the introduction of criminal penalty (imprisonment) for committing ‘insider trading’ on the stock exchanges under the proposed Securities Act and suggested to change criminal penalty to civil penalty for charging heavy fine, speedy recovery and implementation of other administrative actions in capital markets.
According to Alfalah Securities Limited, measures should be taken to restore the confidence of small investors and encourage them to make investments in the capital market.
The proposed Securities Act would help meet the national obligations related to anti-money laundering in the stock market as the proposed legislation would make it mandatory for brokers to get in filled all the documents required for identity and safer investment.
It would make it mandatory for disclosure of price-sensitive information by the companies to shareholders as well as investors so that no one on the Board of Directors or key officials, including chief executive of the company, would use this information for his personal benefit through insider trading. To stop malpractices in brokerage houses, SECP has barred the brokers from clubbing their own assets and assets of the claims in proposed Securities Act.