SECP Takes Action Against Front Running Scam

The Securities and Exchange Commission of Pakistan (SECP) has filed a criminal complaint against two individuals involved in front running equity trading, causing significant losses to State Life Insurance, a major institutional investor.

According to the SECP investigation, Abdul Basit, a day trader, colluded with an Assistant General Manager (AGM) of Investments at State Life Insurance to purchase shares before the institution placed buy orders, and then sold those shares to the institution at an inflated price.

This fraudulent activity occurred between October 1, 2021, and December 31, 2021, resulting in an estimated loss of Rs 5 billion to State Life Insurance.

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The SECP’s investigation team analyzed order-level data and found that a substantial portion of the trades executed by the day trader during this period matched with trades executed by institutional investors as a counterparty.

This evidence suggests that the investment officer of the institutional investor was actively colluding with the day trader.

The criminal complaint, numbered 15 of 2024, was filed on April 8, 2024, at the Special Court (Offenses in Banks) in Karachi.