THIS is apropos of two news reports detailing the plight of stock exchange investors (March 22 and 29). The reports are both shocking and revealing.
They uncover the fundamental reasons why the Pakistan capital market remains isolated from the global financial system and why it shows poor integration with the real domestic economy.
Ravenous sharks infesting the brokerage market of the country have turned it into a casino where small investors are intoxicated and robbed on a regular basis.
Some big players route Pakistani money from foreign lands into domestic bourses and give this fake foreign investment much publicity in the print and electronic media.
When innocent small investors are perfectly trapped in a rising market, the so-called foreign investor packs up, starting his reverse journey. On this reversal in market, the small investor sells his stakes at much lower prices, incurring huge losses.
But the fake foreign investor, as the scheme of things is designed to work, re-enters the market giving it another surge and the cycle continues. This foreign investment is in reality a domestic trap.
The small investors who have approached Security and Exchange Policy Board are asking for the shares present in their accounts which their brokers pledged, without their knowledge and authorization, for their personal wrongful gains.
Investors are asking for the cash present in their accounts which their brokers paid without their knowledge and consent to the brokers` creditors from whom they had raised loans by the unauthorised pledge of their clients` shares.
The investors` claims are easily verifiable from the CDC and ledger statements issued by their brokers. The small investors are not victims of market risk.
They are victims of a broad daylight robbery whose robbers the SECP itself helped run away from the country.
All market participants, including the SECP, the KSE, the CDC, brokerage houses and audit firms, joined hands to rob the investors of their hard-earned savings.
Investors have requested the policy board to intervene and ensure return of the affected clients` full investments. In case investors are ultimately thrown at the door of the apex court to seek justice, they will not confine themselves to compensation.
They will also press into service penal provisions of Section 28 of the CDC Act under which all the above-mentioned culprits are punishable with five years` imprisonment and fine.
Investors will also seek suspension of brokerage licences of all those brokers who floored the market in August 2008.
They will seek cancellation of registration of the KSE under Section 7 and cancellation of registration of CDC under Section 32-A(4) of the Securities and Exchange Ordinance.
Finally, victims of the KSE would not wish to see it alive anymore.
They have prepared a challenging case to wind up the KSE under Section 309(c) of the Companies Ordinance.
By taking out a small percentage from the 900 million Investors` Protection Fund and the KSE`s huge accumulated earnings to compensate the victims of its connivance with market abusers, the KSE can avoid an earthquake of the capital market.