CEDAR CAPITAL (PRIVATE) LIMITED (CCPL) vs COMMISSIONER, SMD, SECP — 2026 CLD 528 SECURITIES-AND-EXCHANGE-COMMI

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CEDAR CAPITAL (PRIVATE) LIMITED (CCPL) VS COMMISSIONER, SMD, SECP. Ss. 15a & 15B---Right issue---Scope---Underwriting---Scope---Trading / purchasing shares after becoming an insider, allegation of---a public listed company (Pak Electron Limited /PEL) announced a 120% right issue on august 15, 2013, offering 144 million ordinary shares at a price of Rs. 12.5 per share, including a premium of Rs. 2.50 per share ; however, prior to said announcement, said public listed company engaged first appellant / company on July 28, 2013 to arrange underwriting for the proposed right issue, but before the public disclosure of the right issue, appellant / company purchased 10,000 shares of public listed company at an average price of Rs. 19.8 per share, while its CEO (Second appellant) purchased a total of 8,190,000 shares at an average price of Rs. 19.72 per share in multiple transactions ; thus, insider trading was alleged---appellants [Private Limited Company (Company) and its Chief Executive Officer (CEO)] were penalized by Securities and Exchange Commission of Pakistan (Commission) for contravention of provisions of Ss. 15a & 15B of the Securities and Exchange Ordinance, 1969---Contention of the appellants was that a right issue, in itself, did not necessarily affect share prices and the same (right issue ) did not qualify as inside information---Validity---The right issue announced by public listed company constituted price-sensitive information under S. 15B of the Securities and Exchange Ordinance, 1969 , as it had remained non-public until august 15, 2013---Contention of the appellants (that a right issue, in itself, did not necessarily affect share prices) was misconceived, as price sensitivity must be assessed in the light of prevailing market conditions---Record demonstrated that the appellants were privy to the non-public information concerning the right issue since July 29, 2013, and the CEO/second appellant proceeded to acquire substantial shares i.e. 8.200 million shares of public listed company during the period in which the information remained undisclosed i.e. from July 29, 2013 till august 15, 2013---The fact that the CEO / second appellant held the shares for an extended period before selling them did not absolve him of the liability as insider trading materializes the moment an insider takes any action on the basis of inside information, irrespective of whether a gain is ultimately realized -- Therefore, the contention of the appellants (that the right issue did not qualify as inside information) was untenable, and purchase of shares by second appellant while in possession of such information clearly constituted insider trading---appellants were legally obligated to abstain from purchasing shares after becoming insiders---Contravention of S.15a of the Securities and Exchange Ordinance, 1969 was triggered the moment the appellants acted upon the undisclosed inside information, and the existence or absence of any resultant gain was immaterial to the establishment of liability---Furthermore, the appellate Bench clarified that the correct amount to be surrendered to the Commission was Rs. 20.999 million and the reference to Rs. 22.999 million in the impugned order was acknowledged as a clerical error, which did not impact the validity or integrity of the findings therein---appeal, being merit-less, was dismissed.

CEDAR CAPITAL (PRIVATE) LIMITED (CCPL) vs COMMISSIONER, SMD, SECP — 2026 CLD 528 SECURITIES-AND-EXCHANGE-COMMISSION-OF-PAKISTAN

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