On Monday, May 8, without naming the accused, the Securities and Exchange Commission of Pakistan (SECP) said it had unearthed a cybercrime racket run by an individual who had been caught "red-handed" cheating small investors by abusing his influence on social media.

A day later, the SECP chairman himself, Zafar Hijazi, hosted a press conference to elaborate on the matter and identify the culprit.

He named the accused as Mir Mohammad Ali Khan — also known to his hundreds of thousands of followers on Facebook as 'Mir MAK' or 'MAK'.

The announcement came as a rude shock to many.

The image MAK has carefully cultivated on social media over the past few years is impeccable: the well-groomed, well-dressed man his followers see on Facebook has been interviewed several times as an 'expert' by local TV channels; given lectures and conducted courses at top universities and corporations in the country; hobnobbed with senior military commanders; and received numerous 'awards', including one from the incumbent governor of Sindh himself.

To his many followers, he is a mentor, an 'enlightened' guide to the country's murky financial markets, a reputable author and an expert on the economy.

Instead, the SECP described MAK as a fraud, a "self-styled stock guru" who misled people for his own gains.

For some who have been following MAK's 'career', however, the SECP's announcement was something of an inevitability.

Dawn.com spoke to both the SECP and MAK regarding the Pakistani regulator's allegations against him and the accused's troublesome past. Here's what we found.

In the regulator's cross-hairs

The SECP had recently announced that it had decided to act against individuals who regularly express opinions on the stock market’s performance on social media.

“Behaving like stock market gurus and making suggestions about investments is illegal. This is a form of manipulation called inducement, which is a crime under the Securities Act, 2015,” Yasir Manzoor, head of the SECP’s Market Surveillance, Supervision and Enforcement Department, had said on April 25, while speaking at a workshop on insider trading and market manipulation.

“One of the latest forms of market manipulation is issuing a false statement, mainly through social media,” he said, adding that the SECP was trying to keep a check on such activities and that a list of 33 such links and pages had been forwarded to the Federal Investigation Agency (FIA).

On May 9, 2017, exactly two weeks after that announcement, the SECP announced it was seeking criminal charges against one Mir Mohammad Ali Khan. The accused was defrauding small investors through a ‘pump and dump’ scheme run from Facebook that netted the accused close to Rs58 million over the course of six months, the regulator said.

“He would buy a large quantity of shares in a company and then tell his social media followers and friends that the financial prospects of the company had greatly improved. When his social media followers rushed to buy the stocks, he would sell his own holdings.

"He repeated this activity several times. By doing so, the accused earned a profit of Rs58 million within six months,” the SECP chairman, who hosted the press conference, told journalists.

Hijazi said the SECP had been keeping a close eye on MAK for the last two years as part of an investigation under Section 139 of the Securities Act, 2015 and had finally caught him "red handed" in the act.

MAK vehemently denied those allegations while speaking to Dawn.com.

"Lies are being circulated in the media against me," he told us.

He claimed that the SECP had not provided him with a single document of intimation regarding the charges being brought against him.

"I visited the SECP five times during the last year and a half. Some seven months ago, they cleared me and thanked me for my cooperation," he claimed.

While Hijazi did not detail the entire investigation into MAK's activities in his press conference, he did speak at length about two instances that he said show MAK's culpability in the charges being brought against him.

The first instance deals with an 'analysis' shared by MAK on the prospects of Ghani Automobile Limited (ticker:GAIL) on his Facebook page on July 13, 2015. In the post, he told his followers that the management of Ghani Automobile had spoken to him about the company being in the process of obtaining a license to manufacture tractors.

Before sharing this 'news' on his Facebook page, Hijazi alleged that MAK had bought 2,554,500 GAIL shares through an account opened in the name of his mother, Razia Farhat Khan.

Caught off guard by the rumour, which was rapidly picked up, Ghani Automobile notified the SECP and the Stock Exchange on July 24, 2015 clarifying that it was not seeking any license to produce tractors.

The incident did not go unnoticed.

The SECP later summoned both Ghani Automobile and MAK to explain their positions, highlighting the contradiction between Ghani Automobile's official statement to the stock market and MAK's claim that the company was acquiring a license to manufacture tractors.

Meanwhile, MAK's followers were buying into GAIL, and the stock price had consequently started rising. Then, according to the SECP, taking advantage of the movement in the stock price, MAK sold his entire holding, booking nearly Rs7.36 million in profit from the trade.

"He repeated the same practice in the shares of seven other scrips. Based on the aforesaid, it was evident that MAK has been involved in manipulating the market and making gains out of it through synchronised trades from a jointly-held account with his mother," Hijazi said at the briefing.

'Hang me by the neck if I'm proven guilty'

MAK has come out swinging against the allegation.

"I challenge the SECP to prove that my mother or I have Rs58 million in any of our bank accounts. They can hang me by the neck if they can," he told Dawn.com.

"Some channels were even airing the news of my arrest. How can I be talking to you, if I have been arrested," he said.

We asked SECP Deputy Director of Communications Sajid Gondal regarding the confusion surrounding MAK's current legal status. Gondal clarified that the SECP had never said they had "arrested" MAK, just that they had "caught him red-handed".

"The confusion might have arisen out of the media's misinterpretation of the word 'caught'," Gondal offered. "He is currently only accused of a crime," he said.

MAK also told Dawn.com that: "I have not written about stocks for the last two years, I have no brokerage house, I have no Facebook page on the stock market. I do not even charge a fee from my students."

However, in a post to his Facebook page on May 7, a day before the SECP announced it had 'caught' him, MAK had commented on the outcome of the French election, and what it entailed for the prospects of three Pakistani steel companies he identified by their stock market trading symbols.

A day later, he spoke to his followers regarding the prospects of the same stocks, even providing an estimated price they could reach.

"What I used to do was that I would purchase shares of a company and announce that I had made an investment. I also posted about both positive and negative aspects of my investment," he told Dawn.com.

"When I had recommended investment in GAIL shares, the value of its share was Rs10. It now stands at Rs19," he said. [GAIL closed on May 9 at Rs15.39; we spoke to MAK later the same day].

"What loss did I inflict on investors," he asked.

"I have a fan following in the millions and I have taught thousands of people on stocks, but not a single investor has filed any report against me," he added.

What are the laws that the SECP believes MAK is guilty of violating? Read them here.

No stranger to controversy

This is not the first time MAK has found himself in the middle of a legal storm.

In 2014, business journalist and entrepreneur Baqar Abbas Jafri had sent out a mass email to financial institutions and investors pointing to MAK's messy 'history'.

Jafri explained to Dawn.com that he had been approached by MAK in 2011 with assurances that the latter would help the former arrange a Dubai-based investor for Jafri's startup.

However, instead of getting him funding, Jafri said MAK stole the expanded vision for the company and claimed it as his own.

In the second paragraph of that email — sent to individuals associated in various capacities with financial markets — Jafri had said: "I would like to inform you all that I have been a victim to a fraud done by US Fugitive [sic] from Wall Street."

"After realising the extent of the fraud that is being hatched against me, and [the] history of the person involved, I relinquished everything and disassociated myself from the company," Jafri wrote.

"He has usurped all my concept and workings, and portrayed me as [an] employee [of the company only]. Now, after realising that his fraud is exposed, he is portraying me as a former employee (CEO) fired by the company," Jafri said.

MAK had proceeded to file a case against Jafri and his team for theft of intellectual property and even managed to have him arrested.

However, the court which was to hear the case shelved it in October 2016 citing lack of sufficient evidence provided by MAK's legal team and cleared the accused of the charges brought against them.

The court had said the case could still go to trial if MAK brought forth additional evidence to support his allegations. There seem to have been no significant developments so far.

The fugitive from Wall Street

There was a reason Jafri brought up MAK's history to demonstrate his own innocence.

"Mr Khan is a fugitive from justice in New York, where state prosecutors accused him last spring of stealing millions of dollars from several of his brokerage firm's customers — including some who also happened to be members of the Gambino organised crime family," American financial journalist Diana B. Henriques wrote in The New York Times in January 2000.

She had stumbled across a "glowing profile of a young Karachi-born financial entrepreneur named Mohammad Ali Khan, who had returned to invest in his native land after 'a highly successful career' in New York."

"'As the youngest chairman and founder of an investment bank in America,'" Henriques quoted from the profile, "'his accomplishments are a little more than extraordinary.'"

"Well, in a way, perhaps they are," she added, wryly.

"The Gambino customers, one of whom is in federal prison, have expressed their annoyance by filing a lawsuit against the absent financier and one of his top brokers," Henriques wrote.

Her story said US prosecutors, the US Securities and Exchange Commission (SEC) and the New York state attorney's office had filed separate lawsuits against Khan in 1999 on charges of grand larceny and committing securities fraud.

We found a litigation release from the US SEC, dated May 17, 1999, in which the regulator wrote: "Khan, who controls KMS [Klein Maus & Shire Inc] and USFG [The United States Financial Group, Inc], and Kohli, Khan's brother-in-law, engaged in two fraudulent offerings of unregistered securities."

"First, between April 1996 and June 1997, KMS, Khan and Kohli fraudulently obtained at least $2.7 million from at least 55 purchasers of KMS securities by making false and misleading statements about KMS' business operations and by overstating its financial condition.

"Second, in offering for sale securities of USFG, KMS' parent company, from July 1997 through January 1998, USFG, Khan and Kohli made material misrepresentations concerning the financial condition of USFG. For example, Khan and Kohli, directly or indirectly, distributed financial statements for KMS and USFG that overstated each company's assets by more than 20-fold and 200-fold, respectively.

"During the course of the offerings of the KMS and USFG securities, Khan and Kohli diverted and dissipated for their personal benefit sums totaling hundreds of thousands of dollars. By March 17, 1999, KMS had exhausted its capital and closed its doors.

"Khan and KMS also: (a) unlawfully offered and sold KMS securities without filing a registration statement and when no exemption was available; (b) unlawfully employed an unregistered salesman to sell the KMS securities and took steps to conceal that activity; and (c) failed to comply with the penny stock disclosure requirements in connection with the sale of the KMS securities," the SEC wrote.

The full text of the US Securities and Exchange Commission's litigation release can be read here.

Federal prosecutors in Manhattan had also filed a criminal complaint against Khan, Henriques reported, accusing him of committing securities fraud by using lies and exaggerations to entice at least 55 people to invest nearly $3 million in his brokerage firm.

'I was targeted for being Muslim'

When asked by Dawn.com about the outstanding criminal investigations against him in the United States, MAK said: "I was the first Muslim who opened a bank in the US, so they [US authorities] behaved with me the same way they treated Agha Hassan Abedi of the Bank of Credit & Commerce International."

Rejecting all allegations levelled against him in The New York Times and other publications, MAK asked: "Why did they not declare me an absconder and convict me in the last 17 years."

"Why were they unable to convict me even when I was unable to defend myself in US courts," he added.

This sense of victimisation reflects in MAK's public relations offensive following the SECP announcement.

He has also invoked religion and projected himself as a 'family guy' while attempting to tap into his followers' sympathies following the personally damaging announcement.

Commenting on why the SECP has decided to act against him in the following video, he says: "I write against what is wrong, maybe because of that; maybe because I speak the truth. Maybe because I have shut down a lot of people operating in capital markets by giving away free advice."

On the other hand, the SECP seems to believe they have the right man.

Confident of the case they have built, the SECP filed criminal charges against MAK in a court on May 9, 2017.

"MAK’s strategy is in violation of Sections 134 and 136 of the Securities Act, 2015 and accordingly penal provisions of Section 159 of the Securities Act, 2015 are proposed to be invoked against him," the regulator said in a press release posted to its website.

"He had been pinpointed. We have all the relevant records with us," Sajid Gondal told Dawn.com. "We have modern trading software that can detect and flag irregular trading patterns, which was used extensively in this case."

Gondal told Dawn.com that the SECP is aware of MAK's 'history' and has approached the Federal Investigation Agency to place him on the Exit Control List so that he does not flee the country.

The MAK case is the latest example of the SECP's robustness in dealing with securities-related crimes, Gondal said.

"We have been working with courts to apprise them of financial crimes and cases of securities fraud and have been getting a very positive response," he said.

If the court finds MAK guilty, he will face three years in jail on top of penalties, Gondal said.

"The penalties we will seek won't just include the return of the wrongful gains made by him, but also additional fines, which may run into the tens of millions of rupees," he said.

"We are confident we will secure a conviction."