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KSE has suspended operations of ACE Securities.

KARACHI -- The Karachi Stock Exchange (KSE) has suspended the operations of ACE Securities Limited (ACE) from April 27, after failure to respond to KSEs notice to ACE asking for explanation pertaining to investor complaints received by KSE for the first time on April 20, 2015.

KSE statement here on Wednesday said that since the first complaint, KSE followed the regulatory procedure set forth in the Exchanges regulations of asking the relevant broker to respond to KSEs questions regarding complainys received against the broker.

In view of increasing number of complaints, KSE sent a letter to ACE Securities on April 20, 2015 and asked them to send their representatives to the Exchange for a hearing.

On April 21, 2015 the KSE received a letter from ACEs manager operations who is also a 5% shareholder, requesting the exchange to allow them a week to settle claims of clients.

In the letter, he mentioned that CEO, Haroon Iqbal has agreed to hand over his personal property (claimed to be worth Rs 100 million) and other assets (claimed to be worth Rs 20 million) as well as sell KSEs shares and TRE certificate in the name of ACE Securities to settle investors claims.

KSE still did not know the authenticity of this shareholders assertions as he had no documentary proof of being an authorised representative of the brokerage house.

For protecting investors interest, on April 21, 2015 KSE requested the Central Depository Company (CDC) to impose restrictions on ACE Securities Participant Account at CDC.

As the number of investor complaints rose to 82 and prima facie claim amount reached Rs 87 million, the Chief Regulatory Officer issued a notice to the broker on April 23, 2015 that their trading terminals will be suspended before market opening on Monday, April 27, 2015.

The Board of KSE ratified this action of the CRO, as required under the Exchanges regulations.

As of end of business day, April 29, 2015 the Exchange received a total of 174 complaints/ claims, prima facie amounting to approximately Rs 152 million.

Initial analysis indicated that the top 15 complaints (out of 174 received) accounted for about 55% of total prima facie claims value, as of April 28, 2015.

The Exchange also seized back office records of the concerned broker with a view of conducting an audit by one of the top audit firms in order to ascertain the veracity of claims and underlying transactions.

The Board of Directors of the Exchange, in its Board meeting scheduled for Thursday (April 30) will further assess the situation and take further actions as necessary under the regulations of the Exchange.

The above is a summary of facts and events as they occurred since April 20, 2015 when the first complaint against ACE Securities was received by KSE.

Full background will become clear when the SECP appointed investigation Committee provides its report, several points need to be highlighted.

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Publication:The Frontier Star (Northwest Frontier Province, Pakistan)
Date:Apr 30, 2015
Words:482
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