BSEC penalises City Bank, fund manager and associates over Fine Foods share manipulation

The Bangladesh Securities and Exchange Commission has fined City Bank, its fund manager, and five other individuals and entities for manipulating the shares of Fine Foods, according to the regulator's monthly enforcement action report for January, published on 19 February.

The penalties follow findings that a group of investors engaged in serial trading of Fine Foods shares between 28 October and 24 December 2024, artificially creating the appearance of active trading and driving up the stock price.

During the period under review, the share price jumped by Tk62.80, or 40.31%, prompting a regulatory probe.

According to the BSEC report, the accused parties violated the Securities and Exchange Ordinance, 1969, by directly and indirectly effecting a series of transactions that created misleading market activity and influenced the price of the stock.

Infographic: TBS

City Bank was fined Tk42 lakh. The regulator's report showed that the bank made a realised capital gain of Tk46.31 lakh from the trades, alongside an unrealised gain of Tk4.34 crore.

Sanowar Khan, the bank's then fund manager, was fined Tk25 lakh against a realised gain of Tk27.63 lakh.

SSS Holdings Limited, owned by Sanowar, was fined Tk17 lakh after booking a realised gain of Tk18.21 lakh. Asmaul Husna, the fund manager's wife, was fined Tk9 lakh against a gain of Tk10.12 lakh, while Anwer Parvez Khan, his brother, was fined Tk2 lakh despite making a relatively smaller gain of Tk1.51 lakh.

Among the other individuals penalised, Avijit Das was fined Tk58 lakh against a realised gain of Tk63.77 lakh. Salauddin Haider, a director of Fine Foods, was fined Tk1 lakh in connection with transactions that yielded Tk0.70 lakh.

In its response to the BSEC's queries, City Bank maintained that the trading activities executed on behalf of the bank were carried out by the fund manager, and in accordance with the bank's internal policies governing capital market investments.

The bank said it had implemented monitoring mechanisms to oversee trading activities, assess portfolio performance and detect suspicious incidents as part of enhanced due diligence measures. 

It noted that on 14 November and 28 November 2024, it flagged certain block transactions executed by the fund manager and sought justifications for the discretionary trades.

Concerns were also raised over same-day buy-sell transactions, for which explanations were subsequently provided.

However, City Bank acknowledged that Sanowar did not disclose trading conducted in his personal capacity or in the accounts of his relatives and related entities.

The bank stated that it became aware of those transactions only after receiving the BSEC's show-cause notice dated 6 August 2025. Monitoring of independent personal or institutional trading activities falls outside the scope of the bank's portfolio oversight, it added.

The bank emphasised that while it earned a realised gain of Tk46.31 lakh, the fund manager and his related accounts collectively earned Tk57.49 lakh in realised gains.

It further stated that 43.79% of the trades under regulatory scrutiny were carried out by the fund manager and his related accounts, information to which the bank did not have access at the time.

Following the BSEC's enquiry letters, City Bank issued a show-cause notice to Sanowar and subsequently removed him from the fund manager position with effect from 19 August 2025. 

The bank said it has initiated internal disciplinary proceedings against him and reviewed its investment policy to introduce stricter ethical parameters governing personal and associated trading activities.

The latest enforcement action comes shortly after the regulator penalised City Bank and related individuals over the manipulation of Agni Systems shares, underscoring the BSEC's intensified scrutiny of market misconduct and its efforts to restore investor confidence through stricter regulatory oversight.