The Securities and Exchange Commission of Pakistan (SECP) has taken decisive action against individuals involved in front-running equity trading by State Life Insurance’s Investments department. A criminal complaint has been filed against two individuals, identified as a day trader named Abdul Basit and an Assistant General Manager (AGM) of Investments at State Life Insurance, at the Special Court (Offenses in Banks), Karachi.

The SECP’s investigation team found evidence of collusion between Abdul Basit and the AGM, wherein the day trader purchased shares before State Life placed buy orders and then sold those shares to the institution. This illicit activity occurred from October 1, 2021, to December 31, 2021, resulting in significant losses for the institution and gains for the trader, totaling an estimated Rs. 5 billion in trades.

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Analysis of order-level data revealed that the day trader, with the assistance of the investment officer of the institutional investor, engaged in purchasing shares ahead of buy orders placed by the institution. This pattern persisted over several months, with a substantial portion of the day trader’s trades matching those executed by the institutional investor.

The SECP’s swift action underscores its commitment to promoting fairness and transparency in the capital market to bolster investor confidence. Such measures are essential to safeguarding the integrity of the financial system and deterring fraudulent practices that undermine market stability.