Unusual, suspicious trading of Khan Brothers shares under investigation

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Khan Brothers PP Woven Bags has sparked surprise. Despite incurring losses for years and refraining from paying dividends for the two fiscal years up to 2022-23, its shares have been rising at an unusual pace.

In just 14 trading sessions between 25 August and 15 September, Khan Brother shares surged by 150%, reaching Tk176.2 on Sunday.

Considering the unusual movement in price and volume of shares, the Bangladesh Securities and Exchange Commission (BSEC) today asked the Dhaka Stock Exchange (DSE) to investigate the trading of these shares.

In a letter to the country's premier bourse, the commission stated that it observed significant fluctuations in the price and volume of Khan Brother PP Woven Bags shares, which appear unusual and suspicious.

"In light of this, you are instructed to investigate the trading of Khan Brother's shares during the recent period to identify the reasons (including market manipulation, insider trading, and other market abuses, if any) behind such unusual movement in price and volume," the letter said.

The DSE has been asked to submit an investigation report to the Surveillance Department of BSEC within 30 working days from the issuance of this letter.

Additionally, the DSE has been instructed to alert the relevant AR/Compliance Officer/CEO immediately regarding any suspicious trade execution that may indicate non-compliance with securities laws.

This abrupt rise in shares is not a first. In mid-February this year, its share price peaked at Tk231 each, although the price was below the face value of Tk10 in April 2023. After reaching that peak, its share price began to decline gradually, closing at Tk78.4 on 25 August.

Despite no disclosed financial information about the company's business being available at the DSE, its share price again started to climb, reaching Tk176.50 on Sunday, gaining 5.94%, or Tk9.9 per share.

This rise comes despite the company incurring a loss of Tk20 lakh during the first nine months of the 2023-24 fiscal year.

Before initiating the investigation, the DSE issued query notices regarding the rising share price on two occasions – on 10 July and 1 September. In response to the queries, the company informed the DSE that no undisclosed price-sensitive information could explain the recent unusual price hike and increase in share volume.

Khan Brothers PP Woven Bag Industries was listed on the stock market in 2014, raising Tk20 crore to purchase machinery, construct buildings, and repay bank loans.