BSEC fines FA Trading for inflating Star Adhesives share price
The decision follows a detailed surveillance report from the premier bourse, which unmasked a systematic effort to artificially inflate the company’s stock value through aggressive and coordinated trading patterns.
The Bangladesh Securities and Exchange Commission (BSEC) has imposed a financial penalty of Tk1 lakh on FA Trading Corporation for its involvement in manipulating the share price of Star Adhesives Limited on the Dhaka Stock Exchange (DSE).
The decision follows a detailed surveillance report from the premier bourse, which unmasked a systematic effort to artificially inflate the company's stock value through aggressive and coordinated trading patterns, according to the enforcement action report of the BSEC.
According to the investigation, FA Trading Corporation, which operates through Jamuna Bank Capital Management, emerged as the dominant force in the trading of Star Adhesives shares between 29 December 2024 and 2 February 2025. During this period, the entity purchased more than 10 lakh shares, accounting for a staggering 40.09% of the total market volume for the scrip. The BSEC noted that the firm engaged in "series trading" – a practice of buying and selling shares in rapid succession to create a false appearance of high demand.
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The surveillance data highlighted several specific instances of manipulation. On 20 January 2025, the corporation executed 100% of the trades within a mere two-minute window, successfully pushing the share price up by Tk0.30 and contributing to a 10% daily increase. Similar patterns were observed on multiple dates in late January and early February.
By the end of the investigation period, the entity had accumulated over 15 lakh shares without offloading any, leading to a 43.33% surge in the stock's price. This artificial rally allowed FA Trading Corporation to sit on an unrealised capital gain of approximately Tk1.20 crore.
In response to the regulator's show-cause notice, Farid Ahmed, the proprietor of FA Trading Corporation, argued during the hearing that the significant purchases were based on technical indicators aimed at securing long-term dividends.
However, the commission rejected this defense, stating that the trading behaviour clearly pointed toward an intentional effort to inflate prices, which harmed the interests of general investors.
