BSEC slaps record Tk1,100cr fines for share rigging, recovery almost zero

Highlights:

• Fines imposed between 19 August 2024 and 8 April 2025
• Only Tk21 lakh fine recovered as of first week of April
• Beximco-linked entities fined Tk428 crore
• Manipulation occurred in 2021 and 2022
• Substantial fines create panic in market
• Market cap drops by Tk85,000 crore since August

The Bangladesh Securities and Exchange Commission (BSEC) has imposed record fines of Tk1,100 crore for share manipulation and various non-compliance issues, but analysts say their recovery remains a big challenge. 

These disciplinary measures, aimed at restoring order in the market, were primarily issued between 19 August 2024 and 8 April 2025, marking the largest enforcement action in the history of Bangladesh's capital market since the commission's establishment in 1993.

The commission, reconstituted under the leadership of Chairman Khondoker Rashed Maqsood following the fall of the Awami League government last August, launched the crackdown on irregularities in the market that occurred during the Hasina regime.

Despite the hefty fines, only Tk21 lakh had been recovered as of the first week of April this year. 

According to the BSEC, the enforcement actions were based on detailed investigations into realised gains – profits already withdrawn by investors from manipulated trades. 

To deter future misconduct, the commission fined offenders nearly the entire amount of their realised gains, deducting only 10%.

"The new commission has imposed fines to restore discipline in the capital market. Those involved in manipulation have been fined their entire realised gain, minus 10%, to ensure no one can make gains from foul play in the market anymore," Abul Kalam, spokesman of the BSEC, told TBS.

Regarding collection, he said, "Collecting share manipulation fines is time-consuming. Accused individuals have at least nine months for review and revision, after which legal proceedings can begin. Fine collection is ongoing."

The accused individuals have three months for revision and six months for review after a fine is imposed, he said, adding that the revision period for fines on several companies has already expired.

When asked for specifics, Kalam said, "It's very difficult to know. It's not possible to say who all have done it." 

However, sources within the commission's enforcement department, who could not provide exact figures, indicated that most of the accused have sought revision. The commission has rejected some of these revision requests.

Beximco tops penalised entities

Among the most heavily penalised entities is Beximco Limited, owned by Salman F Rahman, former private industry and investment adviser to the prime minister. The company and its associated entities, including Marjana Rahman and Associates and Mosfequr Rahman and Associates, were fined a total of Tk428 crore for share manipulation.

Abul Khayer, a government cooperative cadre officer, and his associates – including family members and renowned cricketer Shakib Al Hasan – were fined Tk194 crore. While a review petition submitted by them was rejected by the BSEC, the group later secured a stay order from the High Court.

In May, the BSEC informed the finance ministry about Abul Khayer and his associates' involvement in share manipulation and requested that action be taken against them. 

On 17 June, the Anti-Corruption Commission (ACC) filed a case against Abul Khayer and his associates on charges of fraud and embezzlement related to stock market investments. A total of 15 individuals, including Khayer's wife, were named as accused in the case.

At least 50 other investors were fined Tk351 crore for violating securities laws in share transactions of several insurance sector companies. Additionally, Jashim Uddin, Masudur Rahman, Shikkito Bekar and their associates were fined Tk5.52 crore for share manipulation. The commission also imposed a Tk28.87 crore fine for non-payment of dividends.

Analysis of the information reveals that many of these manipulation incidents are quite old, primarily occurring in 2021 and 2022. At that time, share prices of several companies, particularly in the insurance sector, skyrocketed.

The companies whose shares were manipulated include Karnaphuli Insurance, Paramount Insurance, Global Insurance, BD Finance, Prime Finance First Mutual Fund, Delta Life Insurance, NRB Commercial Bank, Sonali Paper, Fortune Shoes, Fine Foods, Alltex Industries, Khan Brothers PP Woven Bags, Asia Insurance, Sonali Life Insurance and Gemeni Sea Foods.

Several share manipulators contacted by TBS, on condition of anonymity, said that being fined now for share transactions from two to three years ago is completely illegal. They questioned why action was not taken earlier if there was any law violation during the share transactions.

One investor, a victim of a large fine, said, "People invest in the stock market for profit. When they make a profit, they withdraw it and invest in other shares or other sectors. How can I pay the fine now? The commission is discouraging investors through these fines. If this continues, no one will invest in the capital market for profit."

Market reacted negatively

Market participants and analysts suggest that these substantial fines created panic in the capital market, leading to inactivity among major fund holders. The continuous selling pressure resulting from this caused a sustained decline in share prices.

Additionally, the commission has frozen approximately 600 Beneficiary Owner (BO) accounts since the change in government last August, further reducing fund supply in the market.

According to Dhaka Stock Exchange (DSE) figures, the capitalisation of listed shares in the stock market has decreased by around Tk85,000 crore since August last year. Consequently, the DSE's main price index has fallen to its lowest point in five years.

The continuous market decline has even led to investor protests demanding the resignation of the BSEC chairman.

The managing director of a top brokerage house, who wished to remain anonymous, said, "Fines are very positive for ensuring compliance and fair practices in the capital market. However, the large fines have indeed created panic in the market, and a segment of big investors has become inactive. The freezing of hundreds of BO accounts has also tied up funds."

He added, "Fines have been imposed according to the law, but emphasis must also be placed on their collection. Fines have been imposed for manipulation cases from two to three years ago, but the money earned from that manipulation might no longer be in those BO accounts. It might have been reinvested or withdrawn. The commission should consider ways to collect the money now."

'Fine collection won't be easy'

Former BSEC chairman Faruq Ahmed Siddique told TBS, "While fines are necessary to bring discipline to the market, such penalties should not create panic." He believes the current commission's large fines have indeed caused panic, leading to inactivity among some investors.

He also stressed, "The commission's responsibility doesn't end with just imposing penalties; it must also focus on collection. Only those who genuinely manipulated shares should be fined." 

Recalling his own experience, he said, "Those involved in share manipulation never use their own accounts. Instead, they use BO accounts opened in the names of acquaintances. Many times, the person whose name is on the BO account doesn't even know about the share transactions. As a result, it's impossible to collect fines from such individuals."

Commission reshuffle

Following the fall of the Awami League government last August, the BSEC was restructured, Khondoker Rashed Maqsood taking over as chairman.

On 11 May, Chief Adviser Muhammad Yunus held a meeting with capital market stakeholders, where the BSEC chairman presented details of the fines imposed for share manipulation and non-compliance. He also submitted proposals to the government regarding recent activities and plans for capital market development under the new commission.

As the primary regulator of the capital market, the DSE submitted over a hundred reports to the commission after investigating these company share transactions. However, the commission led by Shibli Rubayat Ul Islam, a trusted appointee of the previous government, took little action. While a few companies were fined for share manipulation, most cases remained unaddressed.