In 2000, the Securities and Exchange Commission issued an order. It has taken IHC 24 years to support it – Trendy Blogger

Victories by the Securities and Exchange Commission of Pakistan (SECP) are few and far between when it comes to capital markets. When they end up with a win in their column, it’s cause for celebration. Even if it comes 24 years after the original order was issued.

This is exactly what happened earlier this month, when the International Humanitarian Committee issued its ruling on the long-awaited resolution. In 2000, the Securities and Exchange Commission issued a ruling regarding stocks sold by a particular stock broker. What exactly is the ruling and what are the details of the case in relation to the ruling? In order to understand this, we have to know how the stock market in Pakistan functioned 24 years ago.

Back in the day…

In order to understand what happened, we must go back in time. In the 1990s and early 2000s, Pakistan’s capital markets were like the Wild West. There were few rules and regulations, and there was a caustic attitude towards having a formal method of trading. Brokers were not authorized to ask about a client’s source of funding, trading could be executed without any type of consolidated account opening, and brokers often held the shares rather than delivering them to clients.

Much of this has changed since then.

Accounts are opened only after carrying out a comprehensive Know Your Customer (KYC) procedure. Brokers need to register orders placed by a client with them and clients’ shares are deposited with the Central Depository Corporation (CDC) once they are bought or sold. Clients are informed of any movement in these stocks on that day, and in case they feel something untoward is happening, they can report this discrepancy to the relevant authorities.

Back in the early 2000s, none of these systems existed. In order to place an order with a broker, a client must contact his agent and place a trade with him. These agents are people who are appointed by the brokerage company and act as a liaison between the company and the client. The client will contact the agent and ask him to place a trade. Any trust the client had in the brokerage firm was based on their relationship with the agent and the agent would be the only point of contact. Since the controls were not strict, the agent could purchase shares for the client and place them in his own account instead of assigning him to deposit them into the client’s account. This is where the story of this case begins.

The issue in question

Our story begins in the year 2000 when a client named Abdul Wahab Memon was trading through Siddiq Moti’s financial brokerage company. Memon had a system in which he bought shares for himself through a man named Nadeem Hussain. Nadeem Hussain would take the money from Memon and then buy the shares on his behalf. Since Nadeem Hussain was the man who was in contact with the brokerage firm, he was considered the de facto authority regarding the investments made by Memon. Hussein did not contact the brokerage company or Moti himself. The way things work on the stock exchange is that the broker appoints agents who are the single point of contact between the client and the broker. They act as a link between the two parties. Often times, a client’s trust in a broker depends on his or her relationship with the agent and not on the owner of the brokerage firm. The agent in this case was called Junaid Ali.

In the context of work