The securities regulator has suspended the activities of First Securities Services as issue manager for one year over the submission of false information seeking approval to the IPO proposal of Dragon Sweater and Spinning.
The decision was taken at a meeting held Tuesday at the Bangladesh Securities and Exchange Commission (BSEC).
The BSEC sources said for the first time the regulator has meted out exemplary punishment to an issue manager for submitting false information.
The stakeholders have hailed the regulatory decision terming it 'a good signal' for the capital market.
Earlier, the securities regulator imposed penalties on some issue managers for submitting false information seeking regulatory approval to the IPO (initial public offering) proposals.
Mohammad Saifur Rahman, a BSEC executive director, said the Dragon Sweater and Spinning provided false information regarding its land acquisition to get regulatory approval to its IPO proposal.
"The company has been penalised for violating the Securities and Exchange Commission (Public Issue) Rules, 2006 by providing false information," Saifur Rahman said.
He said the job of the issue manager is to ensure the due diligence of a company willing to go public.
"But the First Securities Services submitted false information on the Dragon Sweater and Spinning without justifying it. That's why the regulator suspended the activities of the issue manager for a year," Saifur Rahman said.
The securities regulator has imposed a penalty of Tk 0.5 million on the First Securities and Services.
As per the regulatory decision, the Dragon Sweater and Spinning will have to pay a penalty of Tk 0.5 million for providing false information.
Md. Shakil Rizvi, former president of the Dhaka Stock Exchange (DSE) and incumbent DSE director, has said from now on other issue managers will think twice about punishment before committing offence.
"The regulatory punishment will serve as a lesson for other issue managers. It's not true that all issue managers are equal. The actual position of the issue managers will be cleared if the unfair means are identified," Mr. Rizvi told the FE.
In Tuesday's meeting, the securities regulator also imposed a penalty of Tk 0.5 million and Tk 0.2 million on Global Securities and Finvest Securities respectively for breaching securities' rules by providing margin loans against the non-marginable securities.
