Imam Button shares soar on restart of production rumour 

The share prices of Imam Button have jumped 21% in just six trading sessions based on a rumour about resuming production at its factory which has been closed since April 2020.

According to the Dhaka Stock Exchange (DSE), the share prices of the button supplier in the garment industries rocketed by 75% since February this year.

The DSE, in a letter on 1 March, wanted to know the reason for such an unusual price hike. In reply, the company said there was no undisclosed price sensitive information that may have accorded the recent price jump.

Imam Button shares closed at Tk41.60 each on 7 April, a big jump from Tk24 on 9 February on the country's premier bourse.

A senior official at a top brokerage firm said a quarter was raising its share price by spreading rumours about the company's restart of production through social media. This happens at a certain time every year. Moreover, as the company's paid-up capital is low, it is very easy to manipulate its shares.

He further said general investors are falling into the trap of manipulation and investing in these stocks looking for huge profits. But so far no visible action has been taken by the stock market regulator. This is giving rise to ongoing manipulations.

Arabinda Nag, acting company secretary of Imam Button, told The Business Standard that the company has stopped production. No decision has yet been made on the re-launch.

He further said that the managing director has operated the company from abroad. And the board has no plan to resume production.

Mohammad Ali is the managing director of Imam Button and is also the owner of the Chattogram-based Imam Group. In January 2020, he fled to the United Arab Emirates after arrest warrants were issued against him in 55 cases filed by the banks and financial institutions concerned for defaulting on loans of Tk800 crore.

However, on 2 December 2020, the Bangladesh Securities and Exchange Commission (BSEC) requested the authorities concerned to bar Mohammad Ali from leaving the country till further notice regarding pending legal actions over financial irregularities.

On 22 December 2020, he suddenly declared that he will buy 65,000 shares of the company through the DSE within the next 30 days.

After the news was revealed, Imam Button's share price rose 7.45% on that day. But he did not live up to his declaration, according to the DSE.

Mohammad Ali was once a member of the board of directors of the National Credit and Commerce Bank (NCC). Using this position, he managed to get loans from various banks.

He was later dropped from the NCC board after his share in the bank fell below 2% and he defaulted on loans taken out from different banks.

Meanwhile, Imam Button has been posting losses since 2011. It is classified as a "Z" category company at the DSE as it failed to pay dividends to its shareholders since that year.

It has also not published any financial statements since 31 March 2020.

Imam Button was incorporated in 1994 and was listed on both stock exchanges in 1996. Its factory is in the Fauzdarhat area of Chattogram city.

Its paid-up capital is Tk7.70 crore. The sponsors and directors hold 30.08%, institutional investors 9.01% and general investors own 60.91% shares in the company.