Ponzi investment scheme: Blink Capital Management case referred to FIA

ISLAMABAD: Reaffirming its firm commitment to safeguarding investors’ interests, curbing market abuse and maintaining the integrity of Pakistan’s capital markets, the Securities and Exchange Commission of Pakistan (SECP) has referred the case of M/s Blink Capital Management (Private) Limited to the Federal Investigation Agency (FIA) for further investigation and appropriate action under the law.

The referral follows a detailed investigation by SECP into complaints of unauthorised collection of funds from investors on promises of fixed and predetermined returns, along with guarantees for repayment of principal amounts.

READ ALSO: SECP refers Blink Capital Management case to FIA over alleged Rs446.6 million fraud

Chairman SECP Dr. Kabir Ahmed Sidhu said that the Commission will deal strictly with market abusers, manipulators and entities that misuse their regulated status to deceive the public. “Safeguarding investors’ interests is paramount. SECP will pursue those who abuse the market or investors’ trust and will take all necessary regulatory and enforcement actions to protect investors and preserve market integrity,” he said.

Blink Capital Management was a licensed futures broker and market maker of the Pakistan Mercantile Exchange Limited (PMEX). Complaints against the company and its directors surfaced in June 2025, alleging that funds had been collected from investors against promises of fixed returns and guaranteed repayment of principal through post-dated security cheques. The complainants also alleged non-payment of their invested amounts and promised returns.

Following the complaints, PMEX initiated regulatory measures, including freezing of funds and restricting the company’s market-making activities. Blink was subsequently found non-compliant with applicable regulatory requirements. PMEX imposed a penalty of Rs1 million and suspended its trading rights. Subsequently, the company closed its offices and disabled its website.

As complaints continued to surface, SECP initiated a formal investigation under Section 83 of the Futures Market Act, 2016.

The investigation involved examination of investors’ agreements, banking transactions, documentary evidence and the flow of funds through various accounts.

The investigation revealed that 35 complainants lodged claims aggregating Rs446.664 million. SECP conducted a detailed analysis of the financial trail relating to 29 complainants, involving approximately Rs408.6 million, representing more than 91 percent of the total amount claimed. Documentary evidence relating to approximately Rs406.542 million was also examined during the investigation.

The financial trail showed that substantial amounts collected from investors were transferred to accounts of Blink Capital Management, its then Chief Executive Officer and a director, as well as accounts linked with certain employees and associated persons. Significant amounts were also withdrawn in cash. The investigation also identified transactions indicating that funds received from investors were used, in part, for making payments to other complainants as purported returns.

The investigation further found that investors had entered into agreements under which predetermined returns ranging from 3.7 percent per month to 48 percent per annum were offered. Post-dated cheques were also issued as security against principal investments.

Based on the evidence available, the investigation concluded that Blink was allegedly operating a Ponzi-type fraudulent investment scheme, involving unauthorised deposit-taking and offering fixed or guaranteed returns beyond the scope of its licensed activities.

The investigation identified potential violations of Section 84(1) of the Companies Act, 2017, Section 47(2) of the Futures Market Act, 2016, and relevant provisions of the Futures Brokers (Licensing and Operations) Regulations, 2018, among other applicable legal and regulatory requirements.

Considering the nature and gravity of the findings, the Commission approved referral of the matter to the FIA under Section 41B of the Securities and Exchange Commission of Pakistan Act, 1997, for further investigation, appropriate action and redressal of investors’ grievances in accordance with law.

SECP has reiterated that registration or licensing of an entity does not authorise it to undertake activities beyond the scope of its licence or to solicit deposits from the public without lawful authority.

Investors are strongly advised to independently verify the regulatory status and permitted activities of an entity before placing funds with it, and to remain particularly cautious of investment schemes promising fixed, unusually high or guaranteed returns.

Copyright Business Recorder, 2026