Nabil Group MD Aminul fined for share manipulation

Infographics: TBS

Aminul Islam, founder and managing director of Nabil Group, and his associates – two firms belonging to the conglomerate – have been fined Tk3.40 crore on charges of share manipulation.  

The Bangladesh Securities and Exchange Commission (BSEC) on 10 December last year decided to impose the fines after the Dhaka Stock Exchange (DSE), during an investigation, found proof of manipulating Orion Pharma shares.  

The market regulator, which sent a letter to the accused in early January detailing the manipulations and fines, published the enforcement report yesterday on its website.  

According to the enforcement report, the commission also fined Nabil Group concerns, Nabil Feed Mills and Nabil Naba Foods, Tk10 lakh each. Aminul Islam serves as the managing director of both companies.  

The Business Standard called Aminul for comment but he did not answer, nor did he respond to the WhatsApp message sent to him.  

The Rajshahi-based Nabil Group came into the spotlight in 2023 after taking a large loan from Islami Bank.

Share trading  

Aminul Islam holds two beneficiary owner (BO) accounts in ICB Securities Trading and Akij Capital Management, while Nabil Feed Mills and Nabil Naba Foods have accounts in United Securities. They traded Orion Pharma shares using these BOs, according to the BSEC report.  

The DSE conducted an investigation into share trading of Orion Pharma from 21 September 2021 to 14 October 2021.  

The investigation found that the drug manufacturer's shares soared by 69%, or Tk47 each, during the period. On 21 September 2021, the share price was Tk68.20 each, which surged sharply to Tk115.20 each on 14 October that year.  

After scrutinising the trade monitoring from the surveillance department of the DSE, the investigation found that Aminul and his associates were involved in trading shares of Orion Pharma, which influenced the price increase.  

According to the investigation report, Aminul and his associates bought 94.55 lakh shares of Orion Pharma and sold 81.36 lakh shares in both the block and public market during the period.  

With their four BO accounts, Aminul and his associates traded 8.39% of Orion Pharma's shares and realised a capital gain of Tk1.47 crore and an unrealised gain of Tk6.16 crore.  

With the trading of shares, the BSEC enforcement report stated that Aminul and his associates violated Section 17 of the Securities and Exchange Ordinance 1969.  

Subsection (e) of Section 17 states: "No person shall do any act or practice, engage in a course of business, or omit to do any act which operates or would operate as a fraud, deceit, or manipulation upon any person, particularly by making any fictitious quotation or creating a false and misleading appearance of active trading in any securities."  

Additionally, the rules state that no person shall directly or indirectly affect a series of transactions in any securities that create the appearance of active trading, raise the price to induce its purchase by others, or depress the price to induce its sale by others.  

The ordinance regarding penalties states that whoever contravenes the provisions of Section 17 shall be punishable with imprisonment for a term that may extend to five years, or with a fine not less than Tk5 lakh, or with both.

Comments of Aminul Islam  

The BSEC called Aminul Islam for a hearing at the commission on 21 May 2023. However, he did not attend physically; instead, he sent a written statement.  

In the written statement, Aminul said that during that period, the shares were trading at a P/E ratio of 17.51, with a decent dividend history, and seemed to have high growth potential. All these factors contributed to his decision to take a healthy position in the stock.  

He added that the frequent buying and selling of shares were done to take short-term profit, if possible, based on daily, weekly, and monthly volume and technical analysis. 

"We hereby confess that we have never done or been willing to take any undue advantage that could cause any inconvenience for the market or general investors. I firmly believe the amount of investment and profit doesn't reflect the accusation," he said.  

However, the BSEC stated that the allegations against Aminul had been found correct and intentional. Due to his actions, general investors were affected, which is contrary to the development of the capital market. Therefore, the commission did not accept his statement