The false information caused shares in Bangladesh Welding Electrodes Ltd (BD Welding), a Z category share on the Dhaka Stock Exchange to rocket 615 percent in the 10 weeks between January and March, up from Tk6 to a high of Tk 50.

During the period, the normally lightly traded share recorded huge turnover levels, with transaction values reaching more than Tk 17 crore.

According to a two-member SEC committee investigating the incident, BD Welding officials sent copies of emails allegedly from a Saudi company, the Al Awad Group to the SEC and the Dhaka Stock Exchange. The emails claimed that the chairman of the Al Awad Group was to visit BD Welding with the intention of investing in the company.

The information was then published on the DSE website and followed up by several newspapers. However the SEC investigation found no evidence that AL Awad Group exists.

SEC Executive Director Mansur Alam said: "After checking the IP (internet protocol) addresses (from where the email originated), the investigators came to the conclusion that the email correspondences was conducted from within the country not from abroad or from the Al Awad Group in Saudi Arabia."

He said this showed that the persons behind the emails wanted to either manipulate the market, or cheat general investors through spreading fictitious and fabricated information.

Mansur Alam said the investigating committee had asked the Consul Office of Bangladesh in Jeddah for information on Al Awad Group's investment proposal and its existence in Saudi Arabia.

"But, the Consul office said that there is no registered company in the name of the Al Awad Group in Saudi Arabia."

He said the report will be placed at the next commission meeting where a decision will be made on the legal actions to be taken against the suspects. The punishment for spreading fictitious and fabricated information is five years in jail or Tk 5 lakh fine or both.

Trading in BD Welding on the Dhaka Stock Exchange has been halted for more than three weeks due to the investigation.

In response to questions from the SEC about the investment proposal, BD Welding said a Saudi business tycoon, Nagi Al-Awad, chairman of Al Awad Group, was scheduled to visit its factory in Chittagong from 8 to 12 March. The company submitted another clarification to the SEC on March 3 saying that the visit was deferred as the Saudi tycoon had been hospitalised.

"The signing of a memorandum of understanding (MoU) will depend on the visit of our factory by Nagi Al-Awad which is now rescheduled," the company said in the note sent both to the DSE and SEC said.

The company further said that according to the draft MoU from the Saudi group, the share price would be determined on the basis of the joint valuation by both the Bangladesh and Saudi companies concerned.

"Since the net asset value will be the basis of determining the price of the share, the floating rate of the company share in the stock market will have no relevance as neither the proposed sellers nor the proposed buyers will look into the stock market price," the company said.

Then the SEC formed a two-member committee headed by its Director ATM Tariquzzaman on March 8 to investigate the investment. The other committee member was Tania Sharmin, assistant director. Its report was submitted to the SEC chairman yesterday.