ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has sanctioned a formal referral to the Federal Investigation Agency (FIA) to initiate legal proceedings in the longstanding Bagasra Securities case. This development comes over 16 years after the brokerage ceased its operations, leaving approximately Rs. 49 million in investor claims unsettled.

According to Securities and Exchange Commission of Pakistan, the approval permits a written reference under Section 41B of the SECP Act, 1997, allowing the FIA to commence formal proceedings concerning alleged unauthorized transfers and pledging of clients’ shares. The referral identifies Mr. Sikandar Esmail Ahmed (Director/CEO), Ms. Shakeela Sikandar (Director), and Mr. Arshad Iqbal Advocate (Liquidator) as the accused parties.

The SECP’s inquiry, initiated in March 2010 following complaints about unauthorized dealings in clients’ securities, concluded in October 2013. It revealed that client shares were transferred and pledged without consent to secure financing and meet exposure margins, benefiting selected clients at the cost of others.

A total of 176.204 million shares, including clients’ holdings, were pledged between July 2007 and March 2010. Subsequent pledge calls by banks and the stock exchange led to the sale of these pledged shares following default. The enquiry noted that the brokerage’s directors and liquidator failed to provide necessary records, forcing the committee to rely on data from the Central Depository Company (CDC), Pakistan Stock Exchange (PSX), and banks.

The National Clearing Company of Pakistan Limited (NCCPL) declared the brokerage a defaulter, while the PSX sold its membership card in 2009 and managed claim settlements. Bagasra Securities ceased operations following a voluntary winding-up resolution in January 2010.

The PSX verified 333 investor claims totaling Rs. 145.50 million, of which Rs. 96.57 million was settled, including Rs. 75 million through the Investors Protection Fund. Claims amounting to Rs. 48.93 million remain unresolved.

The SECP’s decision to support the FIA’s proceedings aims to facilitate the recovery of funds to settle investor claims that have been unpaid for over 16 years.