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Stock Manipulation: Shakib gets off scot-free

  • Jannatul Islam
  • 9th November, 2022 10:35:01 PM
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# Inflates prices of 10.4m shares thru serial trading

# Makes Tk 1.04b transaction thru BO accounts

# BSEC gives the all-rounder ‘clean chit’

Bangladesh Securities and Exchange Commission (BSEC) has taken no action against cricketer Shakib Al Hassan though he allegedly manipulated prices of 10.4 million shares of different companies through serial trading for personal gains.

The serial trading is the buying and selling of shares between the same beneficiary accounts in order to impact the share prices which is a punishable offence under section 22 of the Securities and Exchange Ordinance 1969.

Shakib had transacted Tk 1.04 billion through beneficiary owner (BO) accounts for share anomalies of Fortune Shoes Ltd, Asia Insurance Ltd, One Bank Ltd, NRBC Bank, IPDC Finance Ltd and BDCOM Online, according to sources at BSEC.

The poster boy of Bangladesh cricket was involved in the gambling of securities along with his partners Abul Khair Hero, Hero’s wife Kazi Sadia Hasan, father Abul Kalam Matbar and Javed A Matin, revealed investigation of Dhaka Stock Exchange (DSE).

The stock market regulator has fined Hero, his father and wife Tk 35.5 million but taken no action against Shakib for unknown reasons.

BSEC Executive Director Mohammad Rezaul Karim said the names of many emerged during investigation into the stock manipulation.

 “However, all of them are not involved in irregularities. A hearing was held on the allegation against Shakib. After going through his representative's written statement and looking at the documents during the hearing, we found no clear evidence of violation of the law against him. For that reason, no disciplinary action was taken against him,” Rezaul, also BSEC spokesperson, told the Daily Sun.

BSEC Chairman Shibli Rubayet Ul Islam, however, could not be reached for his comments.

Economists and market analysts said the law should equally be applied for all irrespective of fame and status of any investor.

Eminent economist Prof Abu Ahmed said the introduction of ‘floor price’ helps the gamblers manipulate the market as the stock regulator is also soft on them.

 “If anyone gets involved in market manipulation, he/she should be punished as per the law. Shakib Al Hasan was only warned by the securities commission for the market manipulation. If any abnormal transaction had taken place through his accounts, he can’t avoid the responsibilities,” Prof Abu Ahmed, a former faculty at Dhaka University, told the Daily Sun.

The economists claimed that the market manipulators made gambling with only 20 percent of securities keeping 80 percent out of watch from the investors to make gains from the floor price.

The floor price is the lowest amount at which goods or service may be sold while still functioning within the traditional supply and demand model.

Executive Chairman of Policy Research Institute (PRI) Ahsan H Mansur thinks Shakib or any investors should face legal action if they are involved in market manipulation. “I think the floor price inspires gamblers to manipulate prices of shares of selected companies. There’s no floor price in major markets in the world. Any shares should be given chance to fluctuate to hike or down the price,” he told the Daily Sun.

The DSE investigation found the name of Shakib on eight among 15 top buyers of shares of One Bank. His company Monarch Holdings influenced the stock market to inflate the share prices of One Bank during a period from November 11 to 30, 2021.

The celebrated cricketer managed approval of his brokerage firm Monarch Holdings in February last year during his tenure as BSEC’s ‘goodwill ambassador’.

Earlier, BSEC Chairman Prof Shibli Rubayat Ul Islam claimed that Shakib did not take any remuneration for the brand ambassadorship in the financial literacy programme of the stock regulator.

Shakib is one of the top 20 individuals and companies who were involved in the share anomalies of Fortune Shoes where the share prices were inflated by 94.67 percent through manipulation, according to the DSE investigation.

Shakib traded 2.1 million shares of Fortune Shoes though his BO account with Eastern Bank Securities from May 20 to June 17, 2021. During this time, he bought 1.9 million shares of Fortune Shoes and sold 183,240 units for the transaction of Tk 166 million.

The famed all-rounder traded 1.7 million shares through another BO account and sold 200,000 shares for Tk 16.6 million from the securities of the same company.

The share price of Asia Insurance was increased by 123.45 percent from Tk 30.70 to Tk 68.60 through manipulation between September 9 and October 22, 2020.  Shakib is one of the 15 individuals and companies involved in the manipulation, according to BSEC sources.

He traded 1.02 million shares of Asia Insurance from his account with IIDFC Securities between September 9 and October 22, 2020. He bought 820,000 shares and sold 200,000 units during this time with a transaction of Tk 54.5 million.

For anomalies at Asia Insurance, only Desh Ideal Trust Cooperatives was fined Tk 7.2 million keeping Shakib and 13 others out of the regulatory action.

The price of NRBC Bank shares was raised by 172.58 percent by 20 individuals and institutions, including Shakib, from May 5 to May 24, 2021 through manipulation as it jumped to Tk 33.8 from Tk 12.4.

Shakib traded 2.8 million shares of NRBC Bank through the BO account of EBL Securities where he bought 2.7 million shares and sold 100,000 ones transacting Tk 184.03 million.

The share price of IPDC Finance was manipulated by 60.88 percent from March 29 to April 24, 2022 bringing the unit price from Tk 34 to Tk 54.70. In this case, Shakib traded 2.16 million shares of IPDC through his account with EBL Securities. He bought 1.1 million IPDC shares and sold 1.06 million for Tk 120.29 million.

BSEC fined Hero and his associates Tk 15 million for manipulating IPDC share price, keeping Shakib out of touch.

The manipulators increased the share price of One Bank by 59.53 percent from Tk 12.60 to Tk 20.1 from November 15 to November 30, 2021.

DSE formed an inquiry committee to look into the reasons for such an unusual rise in the share prices.

In the investigation report, the names of 20 individuals and institutions, including Shakib, have emerged.

Shakib traded 8.5 million shares of One Bank with his BO account with Trust Bank Investment Limited. Through buying 7.5 million shares and selling 1 million shares of One Bank, Shakib transacted Tk 463.2 million.

The father of Shakib’s partner Hero and his associates were fined Tk 30 million for the manipulation. However, no action was taken against the cricketer in that case too.

The price of BDCOM Online shares was hiked from Tk 23.6 to Tk 34.3 in just three working days from March 7 to March 10, 2021.

In this regard, DSE's investigation report showed that 15 individuals and institutions increased the share price by 45 percent through serial trading.

Shakib’s Monarch Holdings traded 2.5 million shares of BDCOM through the BO account of Agrani Equity and Investment during that time for a transaction of Tk 33.3 million.

Hero's organisation DIT Cooperatives was fined Tk 55 lakh but Shakib again got away scot-free.