AT least one brokerage house is at the centre of a growing storm of controversy because its owners have reportedly decamped with their investors` funds after making a few bad bets. ACE Securities owners, according to news reports, have fled the country with Rs350m of the clients` funds which were entrusted to them for investing purposes, but were diverted to the owners` bank accounts instead. A crowd of nervous investors gathered outside the head office of the brokerage in Karachi, and for a number of days some of them have been making contact with the media to draw attention to the issue. Then on Monday, the regulator finally moved and suspended operations of all trading terminals belonging to the brokerage.

It is wholly regrettable that the regulator took this long to take action. Reports of problems at the brokerage were doing the rounds since last week. Now that the owners of the brokerage are reportedly no longer in the country, and not responding to the regulator`s notices, it might seem a little late in the day to be taking action.

The matter has dented the regulators` credibility and can cause a significant dip in confidence amongst small investors. The Karachi Stock Exchange management, as well as the Securities and Exchange Commission, should now clarify urgently whose responsibility it will be to ensure that the small investors get their money back.

Additionally, both the frontline and apex regulator should release a timeline detailing exactly when they became aware of problems at ACE Securities, and what course of action was taken subsequently.

The investing public needs to be reassured that their funds will be safe in the hands of registered brokers, and that regulators will exercise vigilance with due care. At this point, there is no assurance that either of these conditions prevail in our stock market.