The Bangladesh Securities and Exchange Commission (BSEC) has fined four investors, including an individual and three institutions, totalling Tk 1.70 crore for violating the share transaction rules of the small-cap company Himadri Ltd.
The stock market regulator issued the fine after a hearing on June 30. BSEC directed the alleged four investors to pay the fines within 30 working days, according to a BSEC order.
In the event of failure to comply, the commission said that it would take necessary actions.
As per the order, stock investors living at Dhaka’s Mirpur DOHS — Md Rafiqul Bari and his firm M/S AR Traders — were fined Tk 1 crore, while M/S Ovi Bricks was fined Tk 60 lakh and Munir Traders Tk 10 lakh.
BSEC on August 30, 2023, ordered the Dhaka Stock Exchange (DSE) to launch an investigation to identify whether any fraudulent activities were behind the price jump of Himadri Ltd shares.
The regulator’s order came after The Business Post published two reports — the first one titled “Defying the bear market, Himadri shares rocketed by Tk2,180 in a month” and the second one titled “Himadri share prices soar 54 times, big cost struggle" — on August 23 and August 29 last year, respectively.
In August 2023, the small-cap company’s shares surged by Tk 2,180, or over 280 per cent to Tk 3,713.7 per share, as per the DSE data.
According to the investigation team’s findings, during the period from April 27 to September 17, 2023, Ovi Bricks and associates realised a capital gain of Tk 2.02 crore and an unrealised gain of Tk 79.95 crore.
This led to Rafiqul Bari and his firm AR Traders being fined Tk 1 crore for violating securities laws.
The per-unit realised gain was Tk 295.41 or 184.60 per cent, and the unrealised gain per unit was Tk 6,267.68 or 3,034.87 per cent.
Besides, Ovi Bricks realised a capital gain of Tk 66.67 lakh during the same period and an unrealised gain of Tk 25.30 crore.
As per the investigation findings, Munir Traders realised a gain of Tk 13.15 lakh and an unrealised gain of Tk 27.33 crore.
When the majority of fundamental shares, including the blue chips, were on the back, the stocks of Himadri, a company listed on the DSE’s SME board, witnessed an unusual price jump in the last year.
When shares of the SME firm skyrocketed, the benchmark index of the country’s premier bourse recorded a significant plunge owing to jitters concerning the market outlook.
The company, which provides cold storage facilities for agro-products such as potatoes across the country, also saw its share price soar by 80 times from April to August last year.
Himadri, which operates six potato cold storage units in the northern part of Bangladesh and is a subsidiary of Ejab Group, has offloaded 11,775 shares, the lowest among the listed SMEs. Its paid-up capital is Tk 2.62 crore only.
The company paid a 10 per cent cash dividend for the year that ended on June 30, 2022.
The SME firm reported earnings per share (EPS) of Tk 3.67 and net asset value (NAV) per share of Tk 1,827.9 for the year that ended on June 30, 2022, compared to Tk 8.23 and Tk 1,822.92, respectively, for the same period the year before.
Shares of the company closed at Tk 2,079.60 on the Dhaka bourse on Thursday.
The firm’s share price was Tk 38.8 each on April 27, 2023, according to the DSE data.
