Sindh Special Court Hands Out First Ever Conviction for Insider Trading in Pakistan

The Sindh Special Court (Offences in Banks) handed out first ever conviction for insider trading in the history of Pakistan in a case filed by Securities and Exchange Commission of Pakistan (SECP). The court convicted Zakir Hussain Somji, Assistant Vice President (AVP) – Investments at Habib Metropolitan Bank Limited (HMB), for insider trading violating provisions of Section 128 of the Securities Act, 2015. The Chairman SECP, Akif Saeed, applauded the legal team, adding that the judgement will boost investor confidence in Pakistan’s capital markets and, in turn, facilitate capital formation. He also expressed hope that the ruling will set a precedent for pending cases and ongoing inquiries into insider trading and market manipulation. The case originated from SECP’s inspection of suspicious trading activity identified through analysis of Karachi Automated Trading System (KATS) data from January 1, 2014, to February 2, 2016. It was suspected that the accused, by virtue of his position at HMB, misused insider information related to the bank’s investment and disinvestment decisions for personal gain. An investigation revealed that the accused purchased 11,795,100 shares of various companies, including 1,230,900 shares (10.43 percent) acquired from HMB, and sold 11,836,600 shares — 4,915,200 (41.52 percent) of which were sold back to HMB — earning an unlawful profit of Rs. 2,866,646. Following the investigation, SECP filed a formal complaint under Section 128, punishable under Section 159 of the Securities Act, 2015. After a full trial and hearing arguments from SECP’s Special Public Prosecutors and the defense, the Special Court delivered its judgment on June 14, 2025. The Court convicted the accused of insider trading under Section 128 and imposed a penalty of Rs. 8,599,938 — three times the unlawful gain. The amount is to be deposited within seven days, failing which the convict will be remanded to jail until full payment is made. The judgment affirms SECP’s mandate to ensure market integrity and investor protection. It sets a strong precedent for future enforcement actions and sends a clear message that market abuse and regulatory violations shall not be tolerated. In a statement, Habib Metropolitan Bank said that almost a decade ago, misused the Bank’s equity decisions purely in an individual capacity for his personal gains. Upon identifying irregularities through a comprehensive internal monitoring process, the bank terminated his employment. The bank said it commends SECP for its diligent efforts in conducting a thorough inquiry and ensuring accountability through due legal process. We also acknowledge our internal teams, who contributed significantly during the investigation process with SECP throughout the legal proceedings, it added.