Bank officer at Habib Metropolitan Bank found guilty of insider trading

In a significant development, the Sindh Special Court (Offences in Banks) has issued the first-ever conviction for insider trading in Pakistan’s history. This groundbreaking case was initiated by the Securities and Exchange Commission of Pakistan (SECP) and resulted in the conviction of Zakir Hussain Somji, who served as Assistant Vice President (AVP) – Investments at Habib Metropolitan Bank Limited (HMB). Somji was found guilty of engaging in insider trading, which is a violation of the Securities Act, 2015.

Akif Saeed, the chairman of SECP, hailed the court’s decision as a major victory that will enhance investor confidence in Pakistan’s capital markets. He also expressed optimism that this ruling would establish a precedent for other cases involving insider trading and market manipulation that are currently under investigation. The case was initiated following SECP’s scrutiny of suspicious trading activities identified through the analysis of data from the Karachi Automated Trading System (KATS) between January 1, 2014, and February 2, 2016. It was suspected that Somji, by virtue of his position at HMB, had exploited insider information related to the bank’s investment and disinvestment decisions for personal gain.

An in-depth investigation revealed that Somji had purchased 11,795,100 shares of various companies, including 1,230,900 shares (10.43%) from HMB. Additionally, he had sold 11,836,600 shares, with 4,915,200 shares (41.52%) being sold back to HMB. This illicit trading activity resulted in an unlawful profit of Rs. 2,866,646. Subsequently, SECP filed a formal complaint, leading to a thorough trial where arguments were presented by SECP’s Special Public Prosecutors and the defense team. The Special Court pronounced its judgment on June 14, 2025, convicting Somji of insider trading and imposing a penalty of Rs. 8,599,938, which is three times the amount of the unlawful gain. The convicted individual was directed to pay the penalty within seven days, failure of which would lead to remand in jail until the total amount is settled.

This landmark decision serves as a significant deterrent against insider trading practices and reinforces the commitment of regulatory authorities to maintain the integrity of Pakistan’s financial markets. It sends a clear message that individuals engaged in such unlawful activities will face severe consequences. This development highlights the importance of transparency, accountability, and ethical conduct in the realm of financial transactions, and underscores the need for stringent measures to prevent illegal activities that compromise the integrity of the market.