Dhaka, Bangladesh (BBN)-The Bangladesh securities regulator has imposed an aggregate amount penalty worth BDT 46.5 million on nine companies and three individuals for their involvement in creating ‘artificial’ demand for Shahjibazar Power Company’s (SPCL) share.
The decisions were taken at a commission meeting held at the office of the Bangladesh Securities and Exchange Commission (BSEC) on Tuesday.
Prime Islami Securities Limited (PISL) will have to pay a penalty worth BDT 25 million, PFI Securities will have to pay a penalty of BDT 15 million, Prime Finance Capital Management BDT 2.0 million, AIBL BDT 0.1 million, Sharp Securities BDT 0.2 million, BLI Capital BDT 0.1 million, GETCO Telecommunication BDT 0.5 million and LIBRA Trading Corporation BDT 0.2 million.
Each director of the Petromax Refinery, a subsidiary of the SPCL, will have to pay a penalty worth BDT 1.0 million and its managing director has also been penalised BDT 0.5 million.
The securities regulator said SPCL share rose abnormally as these companies created an ‘artificial’ demand directly and indirectly by purchasing shares through their own companies and sister concerns.
As of November 18 in 2014, the share price of SPCL increased by 1,233 percent or BDT 313 from its issue price of BDT 25 since its debut on July 15, 2014 despite all regulatory measures.
“A crisis for the shares of the SPCL was created in the market due to the role played by the companies and their sister concerns and consequently the company’s share price rose,” said the securities regulator.
At an urgent meeting held on November 18 last, the BSEC shifted the transaction of shares of the SPCL on spot market declaring the security non-marginable to contain abnormal price hike.
The regulator then also asked all the brokerage firms to submit the SPCL share transaction details on daily basis to the stock exchanges.
According to the BSEC, the PISL breached the securities rules by purchasing the shares of the SPCL beyond the stipulated limit.
The PISL also did not execute the buy orders placed by its clients and provided margin loans to its clients by crossing limit.
The securities regulator has also decided to file cases against Abul Kalam Eajdani, Golam Mostofa, Mrs Nasima Akter Lata and Star Share Bazar with the Special Tribunal for their involvement behind the ‘abnormal’ price hike of SPCL share.
“Those three individuals and Star Share Bazar created artificial crisis by purchasing and holding huge volume of shares of the SPCL. Mr. Eajdani also provided false information regarding the maintenance of BO account with the securities regulator,” the BSEC said.
The regulator has imposed a penalty worth BDT 0.3 million on the chief financial officer (CFO) of the SPCL as Bangladesh Accounting Standard was not followed while calculating the company’s Deferred Revenue Expenditure.
Earlier, the regulator fined the directors of SPCL BDT 1.0 million each along with imposing a penalty of BDT 0.5 million on the company’s managing director for giving false information in the company’s un-audited third quartile report.