ISLAMABAD, July 10: The Securities and Exchange Policy Board on Wednesday informed the Supreme Court of Pakistan that the Securities and Exchange Commission of Pakistan (SECP) had been supporting certain brokerage houses like the AKD Securities which were involved in market manipulation.

The policy board in its report submitted to the apex court also pointed out that the AKD Brokerage House was excluded from the main offence of market manipulation on the basis of external legal opinions.

“In the second case of SSGC and SNGPL the preliminary report into market malpractices was set aside and investigation was initiated only two years later after the issue having being taken up by the NAB,” the Policy Board report said, adding “this is indicative of undue influence of the main market players in the Commission.”

The report also said: “There is no reasoning found in the record or in the stance of SECP given before the Committee to justify the enormous delay in initiating of any action in the matter of SSGC and SNGPL.”

The report approved by Secretary Finance Dr Waqar Masood, who is also the chairman of the Securities and Exchange Policy Board, had been formulated in connection with a case in the apex court, where the complainants challenged the appointment of former SECP chairman Muhammad Ali.

While the apex court had ruled the appointment of Mr Ali illegal and improper and removed him from the post and directed the Securities and Exchange Policy Board to conduct an inquiry into the affairs of SECP.

The report, which has been formulated by Additional Secretary Commerce Ministry Fazal Abbas, Senior Joint Secretary Law Ministry Sohail Qadeer Siddiqui and Secretary SECP Bushra Alam, highlights that the external counsels hired by the SECP were mainly responsible for misguiding the Commission.

The report also said, “It was learnt that at times the external counsels are appointed beyond the list of panel of lawyers approved and maintained by the SECP.”

It highlighted the case of Chenab Limited which was referred to an external counsel who had conflict of interest as he had also remained the counsel for one of the accused parties.

“It was also quite discernible from these cases that the practice of referring cases to external counsels at times used as a pretext to get desired opinions,” the report noted.

Incidentally the main accused in both the cases was the AKD Securities.

It has been said that SECP has its own litigation, legislation and General Counsel Department comprising of more than 20 officers, but quite frequently the legal opinion is sought from external counsels, who are paid substantial amount too.

The report has also criticised the composition of the Securities and Exchange Policy Board, and it has been highlighted that one of the functions of the policy board is to oversee the performance of the commission to the extent that the purpose of this act are achieved.

The report said that there was need to induct private sector members in the policy board.

“The policy board consists of nine members of which five are from public sector, during the past 13 years the position of four private sector members have largely remained vacant.”

Apart from the secretary finance the chairman, other members of policy board are secretary law, secretary commerce, chairman SECP and the deputy governor State Bank.

The court hinted during the proceeding that it may refer the matter to NAB.