Pakistan’s Karachi Stock Exchange Expels 3 Brokers

Aug. 15 (Bloomberg) -- Pakistan’s Karachi Stock Exchange, which barred five brokers from trading shares last month, expelled three of them for not resolving investor complaints.

Eastern Capital Ltd., Cliktrade Ltd. and Capital One Equities were expelled because of their failure to comply with regulatory directives, the exchange said in a statement in Karachi today.

The expulsion of these brokers may lead to criminal proceedings against them, Sohail Dayala, commissioner, Securities & Exchange Commission of Pakistan, said last month, There are a total of about 1,200 investor complaints against the five brokers involving approximately 1 billion rupees ($12 million), he said.

The stock exchange will now invite investor claims against the expelled brokers, which will be assessed by an independent audit firm, the statement said. The brokers’ licenses will then be sold and the funds will be used to settle the claims.

MKA Securities and Prudential Securities, two other brokers which were also suspended because of investor complaints, were given until Aug. 31 and Sept. 15 respectively to resolve matters, it said. MKA Securities’ hearings are still continuing and Prudential has made part payment toward their financial obligations, according to the statement.

“These actions will contribute to restoring the confidence of investors and improving market sentiment,” the statement said.

The benchmark Karachi Stock Exchange 100 index, which fell by a record 58 percent in 2008, has risen 39 percent this year, data compiled by Bloomberg show.