The Bangladesh Securities and Exchange Commission (BSEC) has ordered detailed investigations into suspicious trading activities involving the shares of three listed companies after sharp price gains within a short period.
The companies are Malek Spinning Mills Ltd, Zeal Bangla Sugar Mills Ltd, and Apex Weaving and Finishing Mills Ltd
Shares of Malek Spinning Mills surged 35 per cent to Tk 45.50 between June 22 and July 14 while Zeal Bangla Sugar Mills jumped 48 per cent to Tk 235.40 between June 18 and July 15.
Meanwhile, Apex Weaving and Finishing Mills climbed 49 per cent to Tk 14.10 per share between May 19 and July 16.
In three separate directives issued on July 16, the market regulator instructed the Dhaka Stock Exchange (DSE) to look into the trading of the three stocks and submit comprehensive reports within 30 working days.
According to the letters, the BSEC observed abnormal price movements and suspicious trading behaviour in the shares of the companies, prompting its Surveillance Department to order the investigations.
Under the terms of reference, the DSE has been asked to determine whether the trades involved any coordinated, manipulative or non-genuine transactions.
Investigators will also examine whether any prohibited insider trading took place, including the misuse of unpublished price-sensitive information (UPSI).
The stock exchange has further been instructed to verify whether the stock brokers concerned, dealers and their authorised representatives complied with margin rules as well as relevant orders, notifications and directives issued by the commission.
The regulator also directed the DSE to determine the role and responsibility of the brokerage houses and whether their authorised representatives facilitated, or failed to prevent, suspicious trades.
In the cases of Zeal Bangla Sugar Mills and Apex Weaving and Finishing Mills,
the commission specifically asked investigators to examine the involvement of UCB Stock Brokerage Ltd. in facilitating, or failing to prevent, the questionable transactions.
The commission also instructed the bourse to identify any other irregularities or violations of securities laws uncovered during the investigations.
Apart from the investigations, the BSEC asked the DSE to raise awareness among authorised representatives, compliance officers and chief executive officers of brokerage houses about suspicious trade execution, warning that such activities may constitute violations of the Securities and Exchange Commission (Stock Broker, Stock Dealer and Authorised Representative) Rules, 2000.
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