Nine persons, firms hit with Tk 4.28b penalty for Beximco share price manipulation

The securities regulator has imposed an aggregate penalty of Tk 4.28 billion on five companies and four individuals for manipulating the share price of Beximco in violation of regulations.

Most of the offenders have been fined twice for manipulating the company's share price in both 2021 and 2022.

This marks the first time the regulator has imposed penalties higher than the amount the manipulators gained through unfair practices.

At a meeting on Tuesday, the Bangladesh Securities and Exchange Commission (BSEC) made the decision to impose such a huge penalty, based on an investigation report from the Dhaka Stock Exchange (DSE).

All individuals and companies fined by the regulator are connected to the Beximco Group, BSEC officials said.

The companies include Tradenext International, Jupiter Business, Apollo Trading, Art International, and Crescent Ltd. and the individuals facing punitive action are Marjana Rahman, Mosfequr Rahman, Abdur Rouf and Momtazur Rahman.

These companies and individuals realised a total of Tk 1.57 billion in gains through transactions of Beximco shares in 2021. During that year, their aggregate unrealised gains amounted to Tk 9.85 billion.

In 2022, these manipulators realised an aggregate gain of Tk 3.20 billion through transactions of the Beximco shares, while their unrealised gains were Tk 8.46 billion.

As per the rules, the securities regulator imposes fines on individuals and companies following hearings of the accused based on an investigation report.

A BSEC official, who declined to be named, said that it was very difficult to trace the individuals and owners of the companies involved in manipulating Beximco's shares.

Initially, they refrained from attending the hearings called by the regulator. However, three of the accused companies and individuals sent representatives to participate in the hearings, he said.

"The companies and individuals were linked to the Beximco group," the official said. The findings by the DSE indicated that the five companies and four individuals inflated the prices of Beximco's shares through a series of trades.

These manipulators executed most of these trades among themselves during the reported periods of 2021 and 2022 to create an artificial demand for Beximco shares.

They accounted for approximately 70 per cent of the trade value of the company's shares. As a result, this artificial demand lured general investors to buying this stock.

Of the individuals fined, Mosfiqur Rahman received the highest penalty, totalling Tk 1.25 billion. He was fined Tk 250 million for manipulating Beximco's share price between July 28 and September 6, 2021, and an additional Tk 1 billion for similar activities between January 2 and March 10, 2022.

The second-highest penalty, amounting to Tk 730 million, was imposed on Crescent Ltd. Other penalties included Tk 700 million for Art International, Tk 400 million for Momtazur Rahman, and Tk 310 million for Abdur Rouf.

When asked, BSEC spokesperson Farhana Faruqui said that the accused are required to pay the penalties within 30 days.

The incumbent commission has, for the first time, imposed such a large amount penalties on manipulators. The penalty amounts are also higher than the gains realised by the manipulators in violation of the rules, insiders said.

Previously, manipulators were fined lower amounts compared to their realised gains, which would not deter them from repeating their actions, they noted.

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