Share manipulation fines hit a whopping Tk1,500cr, but recovery remains minimal

In a bid to curb share manipulation, the Bangladesh Securities and Exchange Commission imposed hefty fines totalling around Tk1,500 crore on influential investors – often described as gamblers – for breaching securities laws, mostly through serial trading, over the past one and a half years under the interim government.

The fines, aimed at restoring market order, were primarily issued between 8 August 2024 and 16 February this year, marking the largest enforcement action in the country's capital market since the regulator was established in 1993.

However, recovery of the fines has reached only about 0.35% – roughly Tk5.23 crore – as many penalised investors have yet to pay, and some have challenged the regulator's decisions, raising questions about the effectiveness of the enforcement drive.

Following the formation of the new government, the Ministry of Finance sought details about the commission's activities. In response, the BSEC submitted a report outlining measures taken during the past 18 months, including enforcement actions against share manipulation.

The current commission, led by former banker Khondoker Rashed Maqsood, was formed after the ousting of former prime minister Sheikh Hasina in August 2024.

After taking office, the commission pledged strict action against market manipulation in an effort to stabilise the capital market.

According to officials, the regulator has taken action against manipulation cases that occurred during the previous administration but were largely overlooked by the then-commission.

Under the rules, fines must be paid within 30 working days after being imposed. Those penalised can appeal to the commission for a review within three months and seek a revision within six months.

Companies linked to manipulation cases

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 Gemini Sea Food Limited.

Among the largest penalties was imposed on Beximco Limited, owned by Salman F Rahman, the former private industry and investment adviser to the prime minister. The company and its associated entities – Marjana Rahman and Associates and Mosfequr Rahman and Associates – were fined a combined Tk428 crore for share manipulation.

Abul Khayer, a government cooperative cadre officer, and his associates – including family members and cricketer Shakib Al Hasan – were fined Tk194 crore.

At least 50 other investors were fined Tk351 crore for violating securities laws in transactions involving several insurance sector companies.

In another case, Jashim Uddin, Masudur Rahman, Shikkito Bekar, and their associates were fined Tk5.52 crore for share manipulation. The commission also imposed Tk28.87 crore in penalties for non-payment of dividends.

Abul Kalam, spokesperson for the BSEC, said the penalties were intended to restore discipline in the market.

"The 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," he told The Business Standard.

He acknowledged that collecting the fines can take time. "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," he said.

According to the regulator, individuals penalised by the commission are given three months to seek revision and six months to apply for a review after a fine is imposed.