Panel depicts SEC in poor light

The Securities and Exchange Commission (SEC) failed utterly in leashing the capital market when it was taking a dangerous turn, says probe report on the recent stock market disaster, reports bdnews24.com. The report submitted to the finance minister Thursday last points out that the SEC's steps were "mainly reactive", indicating that it only responded to the happenings and did nothing to stop it from happening. In 2010, the SEC issued 32 directives on margin loans out of a total of 81 directives. Between 2010-end and 2011-beginning, when the market became unstable, the SEC went on fixing margin loan ratio ceiling again and again. In the span of just one week, the ratio was re-fixed from zero to 1:1 to 1:2, which clearly showed that the SEC was reacting pursuant to the market movement. The report underlined that this kind of intervention, although meant to stabilise the irrational rise and fall of the index, actually created a downward pressure, as lowering the margin loan ratio caused forced sale by brokers and merchant banks to adjust the loans they had extended to their clients. "Though SEC directives were meant to protect investors' interest, it's quite clear from the situation of the stock market that it didn't happen so," read the report. The probe committee also stated that it did not see the market regulator, including Dhaka and Chittagong stock exchange authorities, doing anything to verify the incidents of market manipulation reported in details in the media. "It can be said that these bodies, especially the SEC, didn't take any step to trace the funds used for suspicious transactions," said the report. In the report, the committee also cited some examples to drive home the point that funds used in suspicious transactions could be traced out within a "short time", which the SEC failed to. The probe body said they had discovered that the DSE and CSE did not submit any daily or even weekly surveillance report to the SEC, to date. Accusing finger at 50 brokerage houses The stocks probe committee has listed the names of 50 brokerage houses, who sold the highest amount of shares between October last year and January this year. The committee, headed by Khondker Ibrahim Khaled, has drawn up the list based on the data collected from the surveillance software of the market regulator, SEC. However, the brokerage houses listed in the report seem to have been picked up on the basis of their turnovers, and find a mention in the report under the category of "Top 50 Sellers". The probe body found the omnibus account of the Investment Corporation of Bangladesh (ICB) Securities Trading to have had the highest number of transactions, with the total turnover of Tk 9.43 billion. BRAC EPL Stock Brokerage Limited followed the suit, with BRAC Bank Limited trading shares worth Tk 6.8 billion through this house. ICB Securities Trading Company Limited also recorded the third and fourth largest turnovers. Similarly, BRAC EPL Stock Brokerage Limited came again at the fifth position. Individual trader Mohammed Helal Miah traded shares worth Tk 1.8 billion through Hazrat Shah Amanat Securities. Tasmia Amberin traded Tk 1.68-billion shares via Lanka Bangla Securities and Afroza Sharmin's trading through Mult-Securities and Services Limited stood at Tk 1.67 billion. All-in-the-family trading to fore The stocks probe committee has found evidence of bubble of share prices through syndicated trading. The committee outlined three cases where trade between accounts of close relatives or multiple organisations owned by an individual led to overpricing of shares of People's Leasing and Financial Services Limited (PLFSL). Bangladesh Krishi Bank chief Khondker Ibrahim Khaled - led probe Continued to page 20