Nine investors fined Tk 428cr for Beximco stock manipulation

The Bangladesh Securities and Exchange Commission (BSEC) has imposed a fine of Tk 428.52 crore on five firms and four individuals for manipulating prices of Beximco Ltd's stocks, an unprecedented penalty in the country's capital market.

During a commission meeting yesterday, the regulator decided to impose fines on them for manipulating the price of the conglomerate's stock and pocketing around Tk 480 crore.

Although they have unrealised gains, the regulator only considered realised gains.

An unrealised gain is an increase in the value of an asset or investment that an investor has not sold.

Before this, the largest penalty for manipulation of share prices was imposed in 2008, when AB Bank's merchant banking wing was fined Tk 10 crore.

The regulator fined one Mosfequr Rahman Tk 125 crore, Momtazur Rahman Tk 58 crore, Marjana Rahman Tk 30 crore and Abdur Rouf Tk 31 crore.

Furthermore, Crescent Ltd was fined Tk 73 crore, Art International Tk 70 crore, Jupiter Business Ltd Tk 22.5 crore, Apollo Trading Tk 15.01 crore and Tradenext International Ltd Tk 4.01 crore.

Stock market analysts welcomed the move, saying it would send a message to manipulators.

"We always appreciate the full enforcement of rules and regulations, but the penalty must be imposed," said Saiful Islam, president of DSE Brokers Association (DBA).

At the same time, the regulator should have published a full report or provided some clarification about how these individuals and companies violated securities rules, he added.

The Dhaka Stock Exchange sent an investigation report on the trade of Beximco shares in 2022. Focusing on people who traded Beximco's shares the most, the bourse found out that these investors were connected to each other in one way or another.

For instance, Mosfequr Rahman and Momtazur Rahman are brothers who are owners of the companies that were top traders of the stock -- Jupiter Business, Apollo Trading and Art International.

After scrutinising the trade, it was found that they were involved in a series of trading of shares of Beximco to influence its price.

They had collectively acquired more than 10 percent of the company's shares but did not provide any declaration.

These activities were in violation of securities rules, the DSE said.

The same type of transgressions was committed by the other individuals and firms.

They also violated securities rules by posting false and misleading purchase orders for the shares of the company.

A top official of a leading merchant bank said the BSEC should freeze their beneficiary owner accounts as well as their bank accounts so they cannot avoid paying the fine.

"The fine will provide a good indication to foreign and institutional investors. It shows that the regulator is now stricter when it comes to curbing manipulation. But the regulator should be strict for all cases and continue enforcing the rules," he said.

Under the leadership of Prof Shibli Rubayat-Ul Islam, the BSEC started to levy fines properly, but such measures were not consistently taken up, he added.