BSEC fines Hero, his wife Tk 1.37cr for fraudulent share trading

Two stock investors were involved in fraudulent trading practices in the shares of Dhaka Insurance and Green Delta Insurance.

Controversial investor Abul Khayer, widely known as Hero, and his wife Monarch Securities Managing Director Kazi Sadia Hasan pocketed huge money after manipulating the share prices of the two companies through serial trading, according to a probe conducted by the Dhaka Stock Exchange (DSE) during April-June 2021.

After finding that Hero and his wife violated various provisions of securities rules, the stock market regulator imposed a penalty of Tk1.37 crore on them for indulging in the fraudulent trading activity.

A probe conducted by the DSE in the share trading of Dhaka Insurance during April 4 to May 5, 2021 found that they had bought 34,24,354 shares at a weighted average cost of Tk 67.18 and sold 28,43,349 scrips at a weighted average cost of Tk 66.55 of the insurer  through UCB Stock Brokerage, SBL Capital Management and Agrani Equity & Investment.  

Another probe in the share trading of Green Delta Insurance from April 4 to June 2, 2021, found that they had purchased 17,39,625 shares at a weighted average cost of Tk 83.44 and sold 12,38,691 scrips at a weighted average cost of Tk 95.44 of the insurer  through SBL Capital Management and Agrani Equity & Investment.  

The couple had dealt in the scrips of along with other clients—Kazi Farid Hasan, Tanvir Nizam and DITCO-Operative in a fraudulent manner by doing transactions that are not genuine, resulting in the creation of a misleading appearance of trading in the scrips and manipulating the share prices.

“Thereby allegedly violated the provisions of BSEC regulations,” said the investigation team in a note.

The team observed that Kazi Sadia Hasan and Md Abul Khayer violated securities rules by directly and indirectly affecting a series of transactions in the shares of Dhaka Insurance and Green Delta Insurance creating the appearance of active trading and raising the share price.

On March 7, 2022, the BSEC summoned them to explain about their trading activity. At the hearing, they said, “We’ve tried to trade significantly more shares to improve the market scenario and increase the market volume in the very difficult situations like Covid-19 that hit the capital market significantly. It needs a leader with a good number of market participants who will work for the development of the market like existing Chairman sir along with his team of BSEC.”

Sadia Hasan, in her explanation, said, “I always try to comply with rules and regulations at the time of trade. In addition to this my trade volume helps to provide sufficient liquidity in the market which ultimately increases the turnover of the exchanges. I sincerely apologise for the inadvertent mistakes/ contravention that happened through the above-mentioned trades. It has happened due to my ignorance of the fact, not intentional. I am assuring that I will be more careful for future transactions.”

Their explanations failed to satisfy the regulator and thus they were penalised.