BSEC fines Hero, his family members Tk 5.25cr

Bangladesh Securities and Exchange Commission (BSEC) has slapped penalties amounting  Tk 5.25 crore on Abul Khayer, widely known as ‘Hero’ in stock market, and his family member for indulging in fraudulent trade practices in the scrips of NRBC Bank and Fortune Shoes nearly one year ago.

BSEC said it had identified that Hero and his associates manipulated the share prices of the two companies.

The NRBC Bank’s shares were jacked up by 172 per cent and Fortune Shoes by 94.67 per cent during the period from May to June of 2021, a Dhaka Stock Exchange (DSE) probe report revealed.

Apart from the latest penalty, Hero and his associates faced a penalty of Tk 2.09 crore for manipulating shares of three insurance companies—Green Delta Life Insurance, Dhaka Insurance, and Asia Insurance two months back.

However, the penalty is much lower that the capital gains.

After analysing the available documents, the DSE found that Abul Khayer, a client of Agrani Equity & Investment Limited and UCB Stock Brokerage, was the eighth and 12th top buyer of shares of Fortune Shoes from May 20, 2021 to June 17, 2021.

Abul Kalam Matber, a client of UCB Stock Brokerage and SBL Capital Management and Hero’s father, was the second top buyer.

Hero’s wife Kazi Sadia Hasan, a client of SBL Capital Management, and his sister Konika Afroze, a client of UCB Stock Brokerage, were the third top buyers.

Sadia Hasan is also the managing director of Monarch Securities owned by cricketer Shakib Al Hasan. 

Hero and his associates bought a total of more than 3 crore shares of Fortune Shoes during the period.

He traded 24.31 per cent of the total trade volume of the company's shares with the said BO (beneficiary owner) accounts and realised a capital gain of Tk 6.13 crore by trading the company shares during the investigation period. Moreover, his unrealised gain was Tk 23.89 crore, according to the DSE probe report.

Hero, his father and his wife Sadia were fined Tk 1.50 crore for the offence.

In addition, Hero and his family members bought 4,74,57,107 shares and sold 2,61,22,184 shares of NRBC Bank from both the block and market during the period from May 5, 2021 to May 24, 2021.

During the investigation period, Hero and his family members purchased more than 39.98 percent of total trade volume from 11 BO accounts in a series trading, resulting in a capital gain of Tk 15.22 crore from the trading of the bank share.

Besides, they had a sizable unrealized gain of Tk 23.33 crore.

For this reason, the stock market regulator fined Hero and his sister Konika Tk 3.75 crore.

According to the report, Hero and his associates were involved directly and indirectly in a series of transactions of shares of Fortune Shoes and NRBC Bank in order to create the appearance of active trading of the shares.