BSEC slaps Tk187 crore fine on Sea Pearl Beach Resort share manipulators

The Bangladesh Securities and Exchange Commission (BSEC) has imposed fines totalling Tk187.22 crore on nine private firms and four individuals for manipulating shares of Sea Pearl Beach Resort & Spa Limited.

The decision was made in a commission meeting on 4 March, following an investigation into the company's share trading. The regulator will soon issue letters to the involved parties.

Among the individuals fined, Md Kalam Hossain faces the highest penalty of Tk17.50 crore. Others include Abu Sadat Md Faisal with Tk6.50 crore, while Jamrul Hasan Md Iqbal Goni and Md Abu Nayeem were each fined Tk1 lakh.

The four individuals penalised are Md Kalam Hossain – Tk17.50 crore, Abu Sadat Md Faisal – Tk6.50 crore, Jamrul Hasan Md Iqbal Goni – Tk1 lakh, and Md Abu Nayeem – Tk1 lakh. 

The nine firms fined are UDC Constructions – Tk68.01 crore, Venus Builders – Tk69.01 crore, Shatrong Agro Fisheries – Tk25.51 crore, Ridoy Poultry Farm – Tk10 lakh, Hasan Nursery – Tk2 lakh, Amanal Agro Fisheries – Tk40 lakh, Sabbir Store – Tk10 lakh, Sarker Agro Farm – Tk1 lakh, and Mukta Fisheries – Tk4 lakh.

The investigation covered the period from 1 July 2022 to 10 August 2023, during which manipulators violated various securities laws. On 3 July 2022, Sea Pearl's share price was Tk43.50, which surged by an unusual 400% to Tk217.40 on 10 August 2023. 

However, as of today, the company's share price closed at Tk38 on the Dhaka Stock Exchange (DSE).

In another investigation covering the period from 31 July to 25 September 2022, a DSE report identified 13 individuals and institutions (placement holders of Sea Pearl) of violating laws and share transaction manipulation. BSEC's Enforcement and Investigation Department subsequently summoned all of them for a hearing.

During the hearing, four individuals received warnings, while two others were cleared without any action. 

The department presented the cases of seven individuals accused of share manipulation and legal violations to the commission for further action. However, at the commission meeting on 8 August 2023, it was decided to issue only warning letters to them, according to BSEC officials.

Market insiders criticised the response, stating that issuing mere warnings despite clear evidence of manipulation was inadequate.

The DSE's investigation report revealed that between 31 July and 25 September 2022, Sea Pearl's share price surged by 212.73%, rising from Tk44 to Tk137.60, marking a Tk93.60 increase per share.

The report highlighted that potential allies, including Md Aminul Haque and others, purchased 79.43 lakh shares and sold 75.05 lakh shares of Sea Pearl through 19 BO accounts, while five BO accounts recorded no trading activity. 

Collectively, these 19 accounts accounted for 20.49% of the total trade volume, generating a capital gain of Tk24.44 crore during the investigation period.

Additionally, the report revealed that this group of clients held a significant unrealised gain of Tk282.09 crore. The DSE also noted that Md Aminul Haque and his associates engaged in trading Sea Pearl shares among themselves multiple times during the investigation period.

Sea Pearl's recent struggles 

Sea Pearl Beach Resort, which operates The Royal Tulip, reported a loss of Tk3.08 crore in the October–December quarter of the current fiscal year. 

Although this marks a significant improvement – 74% lower than the Tk11.69 crore loss recorded in the same period of the previous fiscal year – the company faced a sharp revenue decline.

Revenue fell by 52% to Tk23 crore in the October to December period, compared to Tk48 crore in the same period of the previous year.

Despite the peak tourism season, luxury hotels faced declining profits due to political unrest and economic uncertainty. 

According to stakeholders, the hotel industry struggled in the first half of the fiscal year, with many businesses failing to attract customers despite offering significant discounts.

Additionally, high inflation and rising utility costs further impacted the industry. Many travellers adjusted their plans amid ongoing uncertainty, contributing to sluggish business performance.