Court Convicts Former AVP for Insider Trading: Landmark Judgment Reinforces Market Integrity
The Special Court has found Zakir Hussain Somji, former Assistant Vice President (AVP) of Investments at a private bank, guilty of insider trading in violation of Section 128 of the Securities Act, 2015.
The conviction follows a comprehensive SECP investigation triggered by irregular trading activity identified through Karachi Automated Trading System (KATS) data between January 1, 2014, and February 2, 2016. Somji was found to have used non-public, price-sensitive information obtained through his role at the bank to execute trades for personal gain.
The inquiry revealed that Somji purchased 11.79 million shares, with the bank appearing as the counterparty for over 1.23 million shares. He later sold 11.83 million shares, with over 4.91 million sold back to the bank—earning unlawful profits of Rs2.87 million. The court found a clear pattern of front running, where Somji traded ahead of, or directly with, the bank’s investment decisions.
Following a full trial, including testimony from SECP prosecutors and a detailed review of trading records, the court found the prosecution’s evidence “cogent and unimpeachable.” The accused’s denial and procedural objections were dismissed. His trades were conclusively linked to him via his CNIC and matched with the bank’s on 173 occasions, which the court deemed implausible without insider access.
Somji was ordered to pay a financial penalty of Rs8,599,938—three times the unlawful gain—within seven days. While no custodial sentence was imposed due to the lengthy trial since 2017, the court made clear that non-payment would result in imprisonment until recovery.
This case marks a significant milestone in Pakistan’s efforts to combat market abuse. The SECP emphasized that the judgment reflects its ongoing commitment to protecting investors and ensuring market transparency. Chairman Akif Saeed praised the outcome, stating it will boost investor confidence and serve as a critical precedent for future enforcement actions.
