SEC fines two cos, two traders for share scams
Monday, 3 May 2010
Mohammad Mufazzal
The securities regulator Sunday fined two big traders and two companies Tk 66.8 million after they were found guilty of manipulating share prices by spreading rumours and breaching laws, officials said.
The Securities and Exchange Commission (SEC) slapped the penalties after its probes into the companies' and investors' dealings found them involved in "artificially jacking up share prices".
"We have brought to book some top share manipulators after years of some in-depth investigations," said an SEC official. "It reflects our seriousness in dealing with any kind of share scams."
The SEC summoned owners of the companies and traders to hearings at its office in Motijheel but only Keya Cosmetics, one of the leading makers of soaps and beauty products, admitted its crime, he said.
The fines were imposed at a commission meeting of the SEC on Sunday.
An SEC investigator said Keya Cosmetics manipulated its share prices after it spread a "rumour" that it would sell 12.4 million shares to a Sri Lankan company named 'Hamus' in 2008.
"The rumour has dramatically jacked up Keya's share price, helping the company make a profit of Tk. 110 million," he said.
Keya would pay a penalty of Tk 53.8 million - the second highest penalty in the country's stock market history. First generation AB Bank was fined the highest Tk 100 million fine in 2008.
Directors of the company have been fined half a million taka each for failing to publish price sensitive information as required by the country's securities rules, the SEC said.
The company could not be contacted for comments.
The regulator has penalised LankaBangla merchant bank five million taka for "playing a part into the Keya share scam", said the investigator.
"The LankaBangla merchant bank took a fee of Tk. 2.7 million for becoming a consultant to help sell Keya's 'rumoured' shares," he said.
The merchant bank refused to comment on the issue. But a company official denied any wrongdoing.
"Hamus was our client but not Keya Cosmetics. I do not know what Keya did with its shares," a high official of the LankaBangla said, speaking on condition of anonymity.
The SEC also slapped fines of Tk. 10 million and Tk. 7.5 million each on two leading investors Yakub Ali Khandakar and Arifur Rahman, after they were found guilty of manipulating Indian soap giant Marico's share prices.
SEC officials said price of Marico shares - set at 90 taka each with 10 taka face value - suspiciously climbed past 300 taka, or more than three hundred per cent, within a month after it made debut on the country's two bourses on September 16, 2009.
"The rise was abnormal and beyond the company's fundamentals. Our probe has found that Yakub Ali and Arifur Rahman jacked up Marico's prices, pocketing a big amount of profits. They breached the country's securities laws," the official said.
The investors could not be contacted for comments.
The securities regulator Sunday fined two big traders and two companies Tk 66.8 million after they were found guilty of manipulating share prices by spreading rumours and breaching laws, officials said.
The Securities and Exchange Commission (SEC) slapped the penalties after its probes into the companies' and investors' dealings found them involved in "artificially jacking up share prices".
"We have brought to book some top share manipulators after years of some in-depth investigations," said an SEC official. "It reflects our seriousness in dealing with any kind of share scams."
The SEC summoned owners of the companies and traders to hearings at its office in Motijheel but only Keya Cosmetics, one of the leading makers of soaps and beauty products, admitted its crime, he said.
The fines were imposed at a commission meeting of the SEC on Sunday.
An SEC investigator said Keya Cosmetics manipulated its share prices after it spread a "rumour" that it would sell 12.4 million shares to a Sri Lankan company named 'Hamus' in 2008.
"The rumour has dramatically jacked up Keya's share price, helping the company make a profit of Tk. 110 million," he said.
Keya would pay a penalty of Tk 53.8 million - the second highest penalty in the country's stock market history. First generation AB Bank was fined the highest Tk 100 million fine in 2008.
Directors of the company have been fined half a million taka each for failing to publish price sensitive information as required by the country's securities rules, the SEC said.
The company could not be contacted for comments.
The regulator has penalised LankaBangla merchant bank five million taka for "playing a part into the Keya share scam", said the investigator.
"The LankaBangla merchant bank took a fee of Tk. 2.7 million for becoming a consultant to help sell Keya's 'rumoured' shares," he said.
The merchant bank refused to comment on the issue. But a company official denied any wrongdoing.
"Hamus was our client but not Keya Cosmetics. I do not know what Keya did with its shares," a high official of the LankaBangla said, speaking on condition of anonymity.
The SEC also slapped fines of Tk. 10 million and Tk. 7.5 million each on two leading investors Yakub Ali Khandakar and Arifur Rahman, after they were found guilty of manipulating Indian soap giant Marico's share prices.
SEC officials said price of Marico shares - set at 90 taka each with 10 taka face value - suspiciously climbed past 300 taka, or more than three hundred per cent, within a month after it made debut on the country's two bourses on September 16, 2009.
"The rise was abnormal and beyond the company's fundamentals. Our probe has found that Yakub Ali and Arifur Rahman jacked up Marico's prices, pocketing a big amount of profits. They breached the country's securities laws," the official said.
The investors could not be contacted for comments.