BSEC probes stock manipulation, laundering tied to Salman F Rahman

The securities regulator has launched an investigation into allegations of stock price manipulation using bank loans, brought against companies and individuals closely tied to Beximco Group owner Salman F Rahman.

It will also examine whether the accused committed money laundering through the alleged financial misconduct.

The Bangladesh Securities and Exchange Commission (BSEC) on Sunday formed a four-member probe committee after receiving a report from the central bank citing initial findings of stock manipulation.

The Bangladesh Financial Intelligence Unit (BFIU) of the Bangladesh Bank (BB) found that eight companies and 34 individuals linked to Mr Rahman hold investments worth Tk 67.97 billion in the equity market.

Referring to the BFIU report, Md. Abul Kalam, BSEC spokesperson, said huge loans had been taken from different banks, including IFIC, in the name of non-existent companies. Mr Rahman was the chairman of IFIC Bank at the time.

The loans were deposited into the bank accounts of the eight companies. Later, the money was invested in equity-based securities.

"The BFIU has prime facie evidence of equity investment of the money received in bank loans," said BSEC spokesperson Md. Abul Kalam.

"The central bank sent us the report to probe into anomalies mentioned in their report," said Md. Abul Kalam, a BSEC spokesperson.

The companies with ties to Mr Rahman are Absolute Construction & Engineering, Apollo Trading Ltd, Beximco Holdings Ltd, Jupiter Business Ltd, New Dhaka Industries Ltd, Crescent Ltd, Central Land & Building Ltd, and Trade Next Internal Ltd.

"There is a huge room of doubt about the motive of such investment made by the companies and the individuals," reads a probe order issued by the BSEC, with reference to the BFIU.

The BFIU suspects that the investments were made to artificially hike the stock prices of companies of Beximco Group and those of other groups.

Mr Kalam said it would be possible to determine whether the accused influenced the stock prices of Beximco Group companies and other listed firms.

The BSEC will also look into the alleged misappropriation of investors' funds raised through Beximco Green Sukuk and IFIC Amar Bond.

Beximco raised Tk 30 billion by issuing green sukuk bonds between 2021 and 2024, and another Tk 10 billion through the IFIC Guaranteed Sreepur Township Zero Coupon Bond in 2024.

Although IFIC Bank was only the guarantor of the Sreepur Township Zero Coupon Bond, Beximco published ads labeling the bond as IFIC Amar Bond to encourage subscriptions.

Referring to the BFIU, the BSEC spokesperson said Mr Rahman used the capital market, the trustees of the funds, and the banking system to misappropriate investors' funds.

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