Tk2.52cr fines levied by BSEC for securities law breaches in May

In May, the Bangladesh Securities and Exchange Commission (BSEC) fined nine individuals and five institutions a total of Tk2.52 crore for violating securities laws. 

The majority of the fines, about Tk2.46 crore, were imposed on eight individual investors and four institutions for manipulating the share price of Crystal Insurance Company Limited.

Among the individuals penalised are Shakib Al Hasan and Md Abul Khayer (Hero). According to the BSEC, they, along with others, artificially inflated the company's share price through a series of coordinated trades, creating a misleading perception of market demand. This disrupted fair trading practices and violated capital market regulations.

According to BSEC findings, the following individuals were involved in price manipulation and have been penalised accordingly: Kanika Afroze has been fined Tk59 lakh, Md Abul Khayer hero Tk37 lakh, Kazi Sadia Hasan Tk13 lakh, Abul Kalam Matbor Tk3 lakh, Shakib Al Hasan Tk3 lakh, Humayun Kabir Tk3 lakh, Md Zahed Kamal Tk2 lakh, and Md Ashfaquzzaman Tk1 lakh.

Among the institutions, Ishal Communication Ltd was fined Tk85 lakh, Monarch Express Tk22 lakh, Monarch Mart Tk15 lakh, and Lava Electrodes Industries Tk3 lakh. These entities were also found to be involved in the share price manipulation of Crystal Insurance.

In addition to the fines, the commission issued warnings to Al-Amin Chemical Industries, Sonali Paper Board Mills, and NRBC Bank PLC for their links to the manipulation case. BSEC stated that its decision was based on findings from a detailed inquiry report.

The commission's investigation revealed that the manipulators used multiple brokerage houses and Beneficiary Owner (BO) accounts to carry out artificially coordinated trades within their network. This gave general investors the false impression that there was high demand for Crystal Insurance shares, even though the broader market was declining at the time.

The share price of Crystal Insurance rose from Tk45 on 16 July 2023 to Tk132.50 on 21 September 2023, marking an abnormal 194% increase without any significant disclosures or business developments. BSEC emphasised that such manipulation harms investor confidence and violates securities regulations.

Despite the controversy, Crystal Insurance has reported positive financial performance. In 2024, the company declared a 12% cash dividend for its shareholders. Its net income rose to Tk24.76 crore, up from Tk19.61 crore the previous year. Earnings per share (EPS) also increased to Tk3.13 from Tk2.77.

As of February 2025, the company's shareholding structure consists of 58% held by the government, 12.77% by institutional investors, 0.05% by foreign investors, and 29.18% by general investors. On Wednesday, Crystal Insurance shares closed at Tk39.70 on the Dhaka Stock Exchange (DSE).

In addition, the regulator has fined one individual, Ms Moniza Chowdhury, and a brokerage firm, Emperor Securities & Wealth Management, a total of Tk6 lakh for violating securities laws.