Finance Ministry orders probe into insider trading claims against DSE Director Abdullah Al Mahmud

The Ministry of Finance has ordered the formation of two investigative committees to probe allegations of insider trading against Abdullah Al Mahmud, the director of the Dhaka Stock Exchange.

The Bangladesh Securities and Exchange Commission and the DSE, Bangladesh’s largest capital market, were instructed to form separate investigative committees to look into the claims.

The Financial Institutions Department of the ministry has also ordered the DSE to suspend Al Mahmud from his duties as director until the investigation is over.

The letter signed by Deputy Secretary Farida Yasmin was sent to the BSEC chairman and the DSE on Wednesday.

Per the directive, the two investigative committees have been given 30 working days to submit their investigation reports.

Despite not receiving the letter from the finance ministry, the DSE has already begun investigating the manipulation of the share market.

Hafizur Rahman, the chairman of the DSE’s Board of Directors, told bdnews24.com: “We have started an investigation which will be conducted transparently. We have not yet received the letter from the ministry. We will talk about it in detail once the investigation is over.”

A professor of Dhaka University’s Department of Banking and Insurance, Mahmud was appointed as the director of DSE by the government.

His appointment was finalised by the BSEC in February last year after complying with demutualisation (separation of ownership from management) laws.

Three months after becoming the director of the DSE, the Daily Jugantor newspaper published a report alleging Mahmud had engaged in market manipulation.

According to the report, shares worth Tk 131.5 million have been traded through three BO (Beneficiary Owner) accounts since he became the director.

Per the rules of the DSE, directors have to report to the DSE’s Conflict Mitigation Committee within a month in case of a conflict of interest.

All transactional information has to be reported there.

Mohammad Rezaul Karim, a spokesman and executive director of the BSEC, told bdnews24.com: “A failure to file the report to the DSE’s Conflict Mitigation Committee is a crime.”

According to the report published by the Daily Jugantor, Abdullah did not submit the information to the DSE.

He has also been accused of profiting off shares by gathering insider information regarding the companies listed in the stock market.

Following the Daily Jugantor’s report, the finance ministry gave directives to investigate whether Mahmud has breached the rules and guidelines of the DSE and BSEC.