Dhaka, Bangladesh (BBN) – A Bangladesh special tribunal on capital market has sentenced a man to two years imprisonment for illegally influencing the stock market through blogs and social networking posts.
This is the first types of verdict awarded in Bangladesh for influencing the capital market. The tribunal which was formed in June is designed to quickly dispose of stock market-related cases.
The convict is Mahbub Sarwar who used to maintain 10 Facebook pages and blogs to provide tips to investors on different stocks, the case statement said.
Justice Humayun Kabir pronounced the maiden verdict on Monday against Sarwar.
The Bangladesh Securities and Exchange Commission (BSEC), the regulator of the capital market, filed the case in 2010 after it unearthed his involvement in market manipulation.
Mahbub used about 10 Facebook pages and blog for giving tips on prices of different stocks to a large number of investors during the market bubble, BSEC lawyer Hasibur Rahman told the court during the argument.
A four-member investigation committee, formed by the capital market regulator with its Executive Directors ATM Tariquzzaman and Md Mahbubul Alam, Director Rajib Ahmed and former DSE chief technology officer ASM Khairuzzaman, found evidences of manipulative activities against Mahbub in 2010.
It was found that Sarwar, then 25 years old, disseminated false information on share prices of different listed companies through his blog posts and popular social networking sites such as Facebook and in this way, he had earned money from retail investors, said Hasibur Rahman, a lawyer for the BSEC.
On his blog, Sarwar, who was then working as an analyst at a private brokerage firm, promised potential clients profits of more than double the average on the Dhaka Stock Exchange (DSE), which was on a bull run at that time.
The investors were misled by the information, according to the probe.
After the regulatory probe, Rapid Action Battalion detained Sarwar in the same year and handed him over to Gulshan Police Station.
Soon after, he was freed on bail.
Police, however, arrested Sarwar on the tribunal premises on Monday after the verdict.
The tribunal is located on the ninth floor of Bangladesh House Building Finance Corporation in Purana Paltan in Dhaka, the capital of Bangladesh.
Sarwar breached the securities rules by giving tips to the investors through his social networking sites in exchange of money, said Hasibur Rahman.
He was also accused of running an unauthorised portfolio management services company – advising clients on which investments to make – for which he charged 20 percent of the profit.
Due to long-pending cases, listed companies sometimes cannot declare dividends or make corporate disclosures.
Whenever the securities regulator imposes fines on any listed company, investor or manipulator, they go to the High Court to challenge the order, negating its efficacy.
Some 500 cases have been filed against companies, investors and manipulators with the courts since 1996, according to data from the BSEC.
Of the cases, the much-anticipated ones are those 15 criminal cases filed against the suspected manipulators who were involved in the 1996 stock market scam and the two cases that were lodged for the crash in 2010-11.
After recommendations from a probe report on the stock market crash of 2011, the Securities and Exchange Ordinance 1969 was amended in Bangladesh Parliament in November 2012, empowering the government to set up special tribunals to try such cases.
BBN/BB/ANS