SEC fines Jamuna sponsor shareholders
Tuesday, 26 June 2007
The Securities and Exchange Commission (SEC) Monday fined three persons and four companies a total of Tk 1.30 million (13 lakh) for their involvement in insider trading, reports bdnews24.com.
The SEC also imposed a two-year freeze on about 0.7 million (7.0 lakh) shares of Jamuna Bank, purchased by the people - two of them sponsor shareholders of the bank - and the four companies in breach of rules.
This is the first move by the capital market regulator in its history against insider trading, a scam by corporate insiders such as directors and key employees.
The accused cashed in on Jamuna shares through heavy buying before the board of directors made a decision on dividends. The SEC said the accused had prior information about the dividend announcement - a situation that created "unusual transactions."
Illegal insider trading generally refers to the buying or selling of a security by a shareholder by misappropriating nonpublic information about the security. Insider trading violations may also include "tipping" such information to others.
Jamuna Bank's sponsor shareholders Noor Mohammad, Tasmin Akhter Chowdhury and her sister Nasrin Akhter Chowdhury face the charges of insider trading.
The four companies are Standard Group, Standard Stitches, Dhaka Insurance and Amotex Limited - all connected to the Jamuna Bank sponsor shareholders.
"It's an eye-opener. We'll go for tougher actions next time for involvement in insider trading," the SEC Chairman Faruq Ahmad Siddiqi told the news agency.
"I hope this will help create awareness among all market players of the consequences of violating corporate rules," he said.
The SEC action followed an inspection last year, which found the seven persons and businesses misappropriating nonpublic information.
The bank's board of directors took the decision to announce 1.5 per cent cash and 25 per cent stock dividends for 2006 at a meeting on April 27 the same year.
Some sponsor shareholders of the bank had heavily purchased the shares before the dividend decision was made.
Sponsor shareholder Noor Mohammed faces a penalty of Tk 2.0 lakh. He purchased 32,000 shares and sold them all.
Jamuna's another sponsor shareholder, Tasmin Akter Chowdhury, was fined Tk 2.0 lakh. The SEC froze her 115,500 shares.
A fine of Tk 5.0 lakh was imposed on Nasrin Akther Chowdhury, sister of Tasmin.
The SEC also "locked in" transactions of 4,19,850 shares that Nasrin had purchased through insider trading.
Amotex has been fined Tk 1.0 lakh for purchasing 40,000 shares.
Hasnat Mosharraf, a third sponsor shareholder of Jamuna, was the authorised representative of Amotex in favour of the issuer. The SEC also locked in the shares Amotex had purchased.
Standard Group was fined Tk 1.0 lakh for purchasing 51,000 shares. All the 51,000 shares were locked in. Standard Stitches was fined Tk 1.0 lakh for buying 50,000 shares.
AKM Mosharrof Hossain, a fourth sponsor shareholder of the bank, was the director of Standard Group and chief executive officer of Standard Stitches.
Dhaka Insurance was fined Tk 1.0 lakh. Jamuna's fifth sponsor shareholder Fazlur Rahman was its chairman. The SEC locked in 11,000 shares bought by Dhaka Insurance.
The SEC also imposed a two-year freeze on about 0.7 million (7.0 lakh) shares of Jamuna Bank, purchased by the people - two of them sponsor shareholders of the bank - and the four companies in breach of rules.
This is the first move by the capital market regulator in its history against insider trading, a scam by corporate insiders such as directors and key employees.
The accused cashed in on Jamuna shares through heavy buying before the board of directors made a decision on dividends. The SEC said the accused had prior information about the dividend announcement - a situation that created "unusual transactions."
Illegal insider trading generally refers to the buying or selling of a security by a shareholder by misappropriating nonpublic information about the security. Insider trading violations may also include "tipping" such information to others.
Jamuna Bank's sponsor shareholders Noor Mohammad, Tasmin Akhter Chowdhury and her sister Nasrin Akhter Chowdhury face the charges of insider trading.
The four companies are Standard Group, Standard Stitches, Dhaka Insurance and Amotex Limited - all connected to the Jamuna Bank sponsor shareholders.
"It's an eye-opener. We'll go for tougher actions next time for involvement in insider trading," the SEC Chairman Faruq Ahmad Siddiqi told the news agency.
"I hope this will help create awareness among all market players of the consequences of violating corporate rules," he said.
The SEC action followed an inspection last year, which found the seven persons and businesses misappropriating nonpublic information.
The bank's board of directors took the decision to announce 1.5 per cent cash and 25 per cent stock dividends for 2006 at a meeting on April 27 the same year.
Some sponsor shareholders of the bank had heavily purchased the shares before the dividend decision was made.
Sponsor shareholder Noor Mohammed faces a penalty of Tk 2.0 lakh. He purchased 32,000 shares and sold them all.
Jamuna's another sponsor shareholder, Tasmin Akter Chowdhury, was fined Tk 2.0 lakh. The SEC froze her 115,500 shares.
A fine of Tk 5.0 lakh was imposed on Nasrin Akther Chowdhury, sister of Tasmin.
The SEC also "locked in" transactions of 4,19,850 shares that Nasrin had purchased through insider trading.
Amotex has been fined Tk 1.0 lakh for purchasing 40,000 shares.
Hasnat Mosharraf, a third sponsor shareholder of Jamuna, was the authorised representative of Amotex in favour of the issuer. The SEC also locked in the shares Amotex had purchased.
Standard Group was fined Tk 1.0 lakh for purchasing 51,000 shares. All the 51,000 shares were locked in. Standard Stitches was fined Tk 1.0 lakh for buying 50,000 shares.
AKM Mosharrof Hossain, a fourth sponsor shareholder of the bank, was the director of Standard Group and chief executive officer of Standard Stitches.
Dhaka Insurance was fined Tk 1.0 lakh. Jamuna's fifth sponsor shareholder Fazlur Rahman was its chairman. The SEC locked in 11,000 shares bought by Dhaka Insurance.