HC upholds fines on Beximco, BD Finance stock manipulators

The High Court (HC) has upheld the securities regulator's decision to impose fines on 22 investors, including individuals, for manipulating stock prices of Beximco and BD Finance.

In an order issued on Thursday, an HC bench comprising Justice Kazi Zinat Hoque and Justice Aynun Nahar Siddiqua validated the decision of the Bangladesh Securities and Exchange Commission (BSEC), withdrawing stay orders and rules previously issued after separate writ petitions had challenged the regulatory order.

The investors had filed 22 separate writ petitions with two HC benches by April this year, challenging the penalties. The court then stayed the regulatory order and asked the BSEC to explain why the imposition of fines should not be declared illegal.

The regulator then appealed against the stay orders, and the chamber court of the Appellate Division sent back the petitions to an HC bench for hearing.

"Finally, the court discharged the rules, keeping the BSEC decision valid," said Barrister AK Azad, a BSEC lawyer.

As per the Securities and Exchange Ordinance, 1969, a plaintiff is required to pay 15 per cent of the penalty imposed by the regulator before the start of legal proceedings against the BSEC.

Investors accused of manipulation had not paid the amount, which was one of the reasons why the court discharged the earlier rules, said Mr Azad.

"Thursday's order further established that anyone is required to pay 15 per cent of the penalty imposed by the regulator," he added.

In 2024, the securities regulator imposed an aggregate amount of penalties worth more than Tk 4 billion on 22 investors over their involvement in the manipulation of the stocks of Beximco and BD Finance.

Mr Azad said the investors had created artificial demand for the stocks through aggressive buy orders.

Some of the investors purchased about 0.7 million shares of Beximco within just five minutes, and the trading pattern was replicated in the case of BD Finance. It was observed that some of those investors made 99-100 per cent of their transactions in just five to ten minutes.

The regulator fined them after completing investigations and the subsequent processes, including hearings.

BSEC spokesperson Md. Abul Kalam said the investors had gone to the court to challenge the action by the securities commission, but the court upheld the BSEC order.

"So, they [the manipulators] will have to pay fines. Otherwise, the regulator will file cases against them as public demand," Mr Kalam said.

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