BSEC found that the firms had attempted to artificially inflate the company’s share price by creating fake demand
Infographic: TBS
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Infographic: TBS
The Bangladesh Securities and Exchange Commission (BSEC) has fined three firms a total of Tk11.10 crore for serious manipulations in the share transactions of Alif Industries Limited, a company listed on the stock market.
The penalties were imposed after a detailed investigation and subsequent hearings by the commission.
BSEC found that the firms had attempted to artificially inflate the company’s share price by creating fake demand—a direct breach of capital market rules.
Sudden price spike triggered probe
The investigation covered the period from 5 February to 9 May 2024, during which Alif Industries’ share price shot up from Tk75.10 to Tk136.10. The sudden spike drew BSEC’s attention, prompting a formal investigation. The share has since tumbled, closing at Tk45.70.
BSEC’s investigation revealed that Faruque Enterprise, Raiyan Trading, and Islam Enterprise jointly fuelled abnormal buying pressure by engaging in circular trading, executing frequent low-volume trades, and buying and selling shares at artificially high prices, sending artificial signals to the market.
These activities drove share prices beyond normal supply-demand dynamics and influenced investor sentiment.
Among the three firms, Faruque Enterprise earned Tk34.4 million in realised profit and Tk22.7 million in unrealised profit through these manipulative activities. As a result, the firm was fined Tk31.2 million.
At the hearing, Kazi Mehedi Arafat, representing Faruque Enterprise, submitted a written explanation denying all allegations.
The company said that all transactions were conducted based on lawful investment strategies and prevailing market conditions. None of the trades created artificial demand or misled other investors.
Raiyan Trading earned Tk30 million in realised profit and Tk26.5 million in unrealised profit, leading to a fine of Tk27.3 million.
The company clarified that it did not coordinate with Faruque Enterprise, Islam Enterprise, or any other firm and said any breach of the 10% shareholding limit was inadvertent. It expressed willingness to provide further documentation if needed.
BSEC found Islam Enterprise to be the most deeply involved, earning Tk58.1 million realised and Tk28.7 million unrealised profit. The firm received the highest penalty of Tk52.5 million.
At the hearing, Rubel Bhuiyan, representing Islam Enterprise, denied engaging in any artificial transactions or deliberate price inflation, saying all trades were carried out under lawful strategies and market conditions.
Islam Enterprise has no coordination with Faruque Enterprise, Raiyan Trading, or any other firms. Any crossing of the 10% shareholding limit was unintentional.
All BO accounts were used for legitimate purposes, and no self-trading or market manipulation occurred. The company emphasised that all actions were conducted in compliance with legal and ethical regulations.
Investors hurt, regulator vows oversight
The latest shareholding data shows sponsors and directors hold 30.24%, institutional investors 10.14%, and general investors 59.62% of Alif Industries’ shares.
Experts noted that general investors suffered the most from the manipulation.
BSEC emphasised that it maintains a zero-tolerance stance on artificial price manipulation and will intensify monitoring and enforcement to ensure transparency and safeguard investor interests in the capital market.