Bangladesh Securities and Exchange Commission (BSEC) has finned four individuals and five entities who are said to be beneficiaries of Beximco Group for manipulating the shares of the company and reaping Tk477 crore in profit.
In a landmark penalty in Bangladesh’s stock market history, the BSEC took action in its commission meeting on Tuesday (1 October), imposing the fine on the accused individuals and entities.
According to the BSEC’s official press release, the individuals fined include Marzana Rahman, Mushfiqur Rahman, Momtazur Rahman, and Abdur Rauf, while the fined companies are Tradnext International, Jupiter Business Ltd., Apollo Trading, ART International, and Crescent Ltd.
They artificially inflated the price of Beximco shares and then sold off the shares to extract significant gains.
In addition, the unrealised profit from these manipulated shares amounted to Tk1,512 crore. These manipulative activities took place between 2021 and 2022.
The highest individual penalty of Tk125 crore was imposed on Mushfiqur Rahman, followed by Crescent Ltd with Tk73 crore, ART International with Tk70 crore, Momtazur Rahman with Tk58 crore, Abdur Rauf with Tk31 crore, Marzana Rahman with Tk30 crore, Jupiter Business with Tk22.5 crore, Apollo Trading with Tk15 crore, and Tradnext International with Tk4 crore.
These entities and individuals executed their fraudulent transactions through various brokerage houses and merchant banks.
Sources from these financial institutions revealed that the entities and individuals involved are beneficiaries of Beximco Group.
A top official from one such brokerage firm told media that one individual and one entity named in the charges had a beneficiary owner (BO) accounts with the firm, but these accounts were always managed by representatives from Beximco Group rather than by the named account holders themselves.
These representatives conducted transactions through the brokerage house, and even the BO accounts were opened in Beximco’s offices.
Dhaka Stock Exchange (DSE) conducted an investigation into Beximco’s share manipulation and submitted its findings to the BSEC.
Based on the DSE’s report, the BSEC summoned the accused for a hearing, but the primary accused did not appear, instead sending young executives with written statements on their behalf.
Most of the BO accounts used in the manipulation were linked to addresses in Shantibagh, Dhaka, with Janata Capital & Investment, a subsidiary of Janata Bank, being the primary facilitator of the transactions. Janata Bank has long been dominated by Beximco Group, with Salman F Rahman holding significant control over its leadership during the 15-year rule of the Awami League government.
According to sources, these share manipulations allowed Salman Rahman to obtain large loans from Janata Bank by pledging inflated shares. The fined individuals and entities are believed to have been pawns in this larger scheme orchestrated by Beximco.
DSE and BSEC suspect that many of the entities fined are actually front companies for Beximco Group, raising doubts about whether the fined individuals even exist.
Market analysts argue that the actual beneficiaries of the share manipulation must be identified by verifying bank accounts and financial transactions.
Only by tracing these accounts will it be possible to establish who truly profited from the scheme.
The first major manipulation took place from 28 July to 6 September 2021, during which Beximco’s share price jumped from Tk90 to Tk120, a 33% increase in just one and a half months.
During this time, the accused nine individuals and entities sold off shares, making a realised profit of Tk157 crore and an unrealised gain of Tk985 crore.
The second wave of manipulation occurred from 2 January to 10 March 2022, resulting in a Tk4 increase in Beximco’s share price, and the accused realised Tk320 crore in profit with an additional Tk526 crore in unrealised gains.
Although the DSE submitted its report on the manipulations in August 2022, the previous BSEC leadership, under Shibli Rubayat Ul Islam, took no action.
It wasn’t until the commission was restructured under the new leadership of former banker Rashed Maksud following the government change on 5 August 2024 that the BSEC finally acted.
Experts within the stock market sector believe that 90% of the profits made by the manipulators have been penalised, sending a strong message to the market.
They assert that stringent punitive measures against manipulation will deter future misconduct.
However, former BSEC Chairman Faruq Ahmed Siddiqi emphasised that identifying the true beneficiaries of the manipulation should be a priority before imposing fines, as proper identification is essential for penalty enforcement.
