39 illegal brokerage houses detected

ISLAMABAD (July 18 2003) : The Securities and Exchange Commission of Pakistan (SECP) has detected 39 international brokerage houses in the country which are illegally raising huge funds from the public in the name of securities, currency trading, money market, etc.

According to SECP, “the unscrupulous dealers” may cause another financial scam as created by finance companies like Taj Company and co-operative societies in the previous decades.

Addressing a press conference at SECP office here on Thursday, Chairman Abdur Rahman Qureshi released the list of the companies, which were “detected through undisclosed visits of the Commission officers and on the basis of complaints received consequent to the SECP's advertisement”.

Recently, the Commission had published ads in newspapers warning the general public that the brokers have no legal cover and these elements after grabbing the savings may go into hiding.

It is interesting to point out that while the companies had their offices in different towns of the country, one was operating right from the Karachi Stock Exchange (room 516).

According to the SECP Securities Market Division, the so-called international brokerage houses by incorporating under the company law are involved in soliciting clients for collecting deposits for investment through principals outside Pakistan, where the SECP has no jurisdiction. Mostly these operate through the Internet.

The types of investment offered include securities, currency trading, futures currency trading, money markets, securities index trading, commodity future, options, bonds, etc.

The modus operandi of the companies is that individuals desirous of dealing in future market or foreign commodities and precious metals have to deposit in foreign exchange a sum of money as margin deposit with these companies.

Through communications services, the client makes a deal or takes a position on currencies or commodities with the principals abroad without involving actual delivery of foreign exchange/commodities.

The difference between sale/purchase price is settled though margin account and in case of loss, the margin is replenished by the client.

The Commission received complaints about these entities/individuals, claiming to be agents of international brokerage houses to make investments, which mostly were in international currencies and commodities through the Internet.

It was revealed that the brokerage houses to which such companies project themselves as agents are neither members of any stock exchange nor are registered with SECP as brokers or agents.

The SECP held that the activities of these companies pose a serious threat to the investors because these companies are allegedly involved in activities without any legal authority and regulatory framework.

On receipt of reports from different circles about the involvement of such companies in dubious activities, the SECP through advertisement cautioned the general public that such brokers have no legal cover and chances of seeking relief or upholding their rights are improbable as in most cases, these un-scrupulous dealers, after grabbing the savings of innocent people may go into hiding.

The public was advised to ensure that stock brokers/agents they choose to work were duly registered/licensed by the SECP.

It was also highlighted that these so-called brokers are not authorised to take deposits.

The SECP detected 39 illegal brokerage companies through undisclosed visits of the Commission officers and on the basis of complaints received consequent to the SECP's advertisements.

SECP-SBP joint action:

The activities of these companies have been a subject of discussion with the State Bank of Pakistan and it was concluded that such activities are not allowed in other countries as well, and hence be treated as illegal in Pakistan.

It has been decided to adopt a coordinated strategy by the SECP and SBP to deal with the issue.

It was further decided that the SECP would take necessary action against incorporated unauthorised houses and members of the stock exchanges involved in such businesses, while the SBP would take action against the remaining entities under the Banking Companies Ordinance.

Accordingly, show cause notices under Section 309 of the Companies Ordinance-1984 have been issued to 10 companies for doing activities ultra-vires to the Memorandum of Association and necessary decision in the matter of two companies has been taken, while the remaining eight cases are awaiting personal hearings as envisaged by the law.

The SECP is collecting information about 39 companies and if it is proved that these companies are engaged in these activities, similar action will be taken against them.

The list comprises the following companies:

1. Leader Forex (Pvt) Ltd, New Garden Town, Lahore.

2. Aglam Global Links (Pvt) Ltd, Islamabad Publication (Pvt) Ltd, Aabpara, Islamabad.

3. Multiforex International (Pvt) Ltd, 1st Floor Razia Shareef Plaza, 92-Jinnah Avenue, Blue Area, Islamabad.

4. Pacific Resources (Pvt) Ltd, 65-East Pakpavillions, Fazal-e-Haq Road, Islamabad.

5. Intercomex Financial Data Services (Pvt) Ltd., Abdali Road, Multan.

6. Universal Resources (Pvt) Ltd, 118-A Ripple Plaza, People's Colony, Faisalabad.

7. Madina Enterprises (Pvt) Ltd, Jhang Road, Faisalabad.

8. Forex Management & Consultant (Pvt) Ltd, Darul Aman Cooprative Society, Karachi.

9. Hilinks Pak (Pvt) Ltd, Karachi.

10. Rouf Int'l Advisory Services (Pvt) Ltd, Gulberg-II, Lahore.

11. White House Securities (Pvt) Ltd, The Plaza, Clifton, Karachi.

12. Glonex (Pvt) Ltd, Gulberg-II, Lahore.

13. Offshore Global Management (Pvt) Ltd, Iqbal Town, Lahore.

14. Apex Services (Pvt) Ltd, Clifton, Karachi.

15. World Business Consultant (Pvt) Ltd, Kalma Chowk, Gulberg, Lahore.

16. Bulls and Bears (Pvt) Ltd, 32-Davis Road, Lahore;

17. Noble Management Consultants (Pvt) Ltd, Al-Hafeez Centre, Gulberg-III, Lahore.

18. Services International (Pvt) Ltd, College Road, Sargodha.

19. Offshore Global Management (Pvt) Ltd, Karim Block, Allama Iqbal Town, Lahore.

20. United Brokerage Consultant (Pvt) Ltd, Main Boulevard, Alama Iqbal Town, Lahore.

21. Future Trading Advisers (Pvt) Ltd, Karim Block, Allama Ibqal Town, Lahore.

22. Pindex (Pvt) Ltd, 95-Abid Majid Road, Lahore Cantt.

23. Forex Links (Pvt) Ltd, Robert's Road, Neela Gumbad, Lahore.

24. Wall Street Securities (Pvt.) Ltd, Palm Beach Homes, Clifton Bock-2, Karachi.

25. Trade & Brokerage (Pvt) Ltd, North Nazimabad, Karachi

26. CFC Global (Pvt) Ltd, Amber Tower, PECHS, Karachi.

27. Harvest International (Pvt) Ltd, El-Beena Commercial Centre, Clifton, and Karachi.

28. Intercomex Financial Data Services (Pvt) Ltd, Aftab Centre Davis Road, Lahore.

29. Daxing International (Pvt) Ltd, 1 Canal Park Gulberg-II, Lahore.

30. Global Links (Pvt) Ltd, 15-H Gulberg-II, Lahore.

31. Intertrade Intelligence Comm (Pvt) Ltd, 21/E, Gulberg-III, Lahore.

32. Multiforex International (Pvt) Ltd, Multiforex Bank Road, Rawalpindi.

33. Tycoons's International (Pvt) Ltd, 1629/B Ghaffar Plaza Multan Cantt, Multan.

34. International Financial Consultants (Pvt) Ltd, Jans Shopping Arcade, Islamia Road, Peshawar.

35. Topworth Equity International (Pvt) Ltd, Frontier Constabulary Building, Peshawar.

36. Credit Manhattan Securities (Pvt) Ltd, R No 516, Karachi Stock Exchange (Guarantee) Limited Building, Stock Exchange Road, Karachi.

37. Services International (Pvt) Ltd, 2nd floor, Main Boulevard Gulberg-III, Lahore, Lamsy Arcade Peshawar Cantt, and Peshawar.

38. Trade Station Securities (Pvt) Ltd, 2nd floor, Jail Road, 89-C, Lahore.

39. Aglam Global Links, Basheer Plaza, Adamjee Road, Rawalpindi.

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