The scam-hit Fareast Islami Life Insurance Company is witnessing an unprecedented price hike and increase in volume of shares despite no undisclosed price sensitive information (PSI).
Within a week, the life insurer's share price rose more than 65 per cent or Tk 32.5 each to close at Tk 82.60 on Monday. It was also more than two years' highest closing price on the Dhaka Stock Exchange.
The company's share price was Tk 50.10 a week earlier on December 29, 2021. Its shares traded between Tk 36.10 and Tk 82.60 in the last one year, according to data from the DSE.
Following the 'abnormal' price hike, the DSE served show-cause notice on the company on Sunday.
The company, however in a knee-jerk response, informed the DSE on Monday that there is no undisclosed price sensitive information for recent unusual price hike and increase in volume of shares.
Even after being served show-cause notice, the company's share price has not stopped rising and soared about 10 per cent further on Monday, becoming the day's second top gainer.
According to media reports published recently, the Fareast Islami Life Insurance allowed its former chairman and directors to commit serial financial crimes and siphon off policy holders' funds worth more than Tk 21 billion between 2010 and 2020, found a special audit recently.
The audit was commissioned by the Bangladesh Securities and Exchange Commission (BSEC) after receiving allegations that the life insurer has failed to meet customers' claims and matured policyholders' payments.
The BSEC in September last restructured the Fareast Life board by appointing 10 independent directors, after receiving a primary audit report from A Wahab & Co. Chartered Accountants.
The commission also directed the Central Depository Bangladesh Ltd (CDBL) to freeze all shareholdings into Fareast Insurance and other listed companies by specific individuals, their families or entities under the control of the individuals.
The directors embezzled the funds by showing manipulated prices while buying land, investing in their own companies and providing advances to fraudulent cooperatives, the special audit found.
Analysts are saying the company's share price is rising fast despite the scam news and the regulator should investigate whether there are any wrongdoings from manipulators.
"The investors should also be cautious about buying overvalued stocks in order to avert any misfortune," said an analyst at a leading brokerage firm.
He noted that some influential investors by disseminating rumours are trying to manipulate the prices of shares of many companies.
Senior executives of the company could not be reached over the telephone.
Even the life insurer failed to declare dividend for the year ended on December 31, 2020. And its sponsor-directors failed to hold mandatory 30 per cent shareholding in the company.
Listed in 2005, Fareast Islami Life Insurance disbursed 10 per cent cash dividend in 2019 and provided a 20 per cent cash dividend in 2018.
The company's paid-up capital is Tk 747.43 million and authorised capital is Tk 1.0 billion, while the total number of securities is 74.74 million.
The sponsor-directors own 24.50 per cent stake in the company, while the institutional investors own 44.10 per cent, foreign investors 0.37 per cent and the general public 31.03 per cent as on November 30, 2021, the DSE data showed.