Government official Abul Khayer, alias Hiru, is a big investor in the capital market, big enough to influence him at will: when he buys a share, others follow suit because they know it will be a sure shot chance. Leveraging this huge influence, he manipulated the prices of many stocks and made a quick profit in the process.

On Following such manipulations in nearly a dozen companies, the Bangladesh Securities and Exchange Commission (BSEC) fined him and his associates at different times in 2022. Since they failed to pay the penalty within the stipulated time, the regulatory body filed four cases for recovery of the penalty.

The market regulator fined the defendants more than Tk 14 billion for serious violations of the securities law by affecting the share prices of 11 companies, according to an enforcement report from the commission.

Almost two years have passed but Khayer and his family members have paid only around Tk 5 by October 15, officials added.

BSEC spokesperson Rezaul Karim told The Business Standard that the Enforcement Directorate has filed four certification cases against the accused to recover unpaid fines.

The previous commission, led by Shibli Rubayat-Ul Islam, who resigned a few days after the fall of Sheikh Hasina’s government on August 5, had extended the deadline by one year after the accused failed to pay the fines within the stipulated 30 days.

Khayer had applied for another year to pay the outstanding amount of around Tk 10 million in 12 installments. However, on September 18, the commission rejected the request and began filing lawsuits.

The commission extended the deadline once to pay the remaining amount, but we could not pay the penalty because the market was not good.

Abul Hayer

In response to the question, Abul Khayer told TBS: “We paid 5-6 billion lira of the penalty to the commission.”

“The commission extended the deadline once for the payment of the remaining amount, but because the market was not good, we could not pay the penalty and sell shares.”

According to an enforcement report, Khayer and his partners, Green Delta Insurance, Dhaka Insurance, Asia Insurance, Fortune Shoes, One Bank, NRBC Bank, BD Com Online, IPDC, Bangladesh National Insurance, Genex Infosys and Paramount Insurance.

Family members are also fined

The commission imposed a fine of nearly Tk 14 million in 2022 on Khayer, her husband Kazi Sadia Hasan, her father Abul Kalam Matber and their companies DIT Cooperative and Desh Ideal Cooperative after obtaining evidence of share manipulation in 11 companies, including several others. insurance industry.

According to the reports of the BSEC enforcement office, realized capital gains were around Tk 50 billion, while unrealized capital gains were around Tk 100 billion.

Realized capital gains refer to the profit made after shares are bought and sold, while unrealized capital gains arise where shares have been purchased but have not yet been sold even though they are available for sale.

Khayer and his partners faced new fines for manipulating shares of Paramount Insurance.

On September 24, the commission imposed a total fine of Tk 1.63 billion on cricketer Shakib Al Hasan, Khayer and their companies (Eashaal Communication, Monarch Mart, Lava Electronics Industries), as well as Abul Kalam Matber.

Eashaal Communication received the highest fine of Tk 75 lakh, followed by Tk 50 lakh for Shakib, Tk 25 lakh for Khayer and Tk 1 lakh for Monarch Mart, Lava Electronics Industries and Matber.

On October 7, the commission informed the finance ministry about the fines imposed on Khayer and his associates. In the letter, a copy of which was obtained by TBS, it was stated that Khayer, a government employee, together with his partners manipulated the share transactions of various companies in the capital market at different times. This manipulation undermined the development of the market, causing significant losses for general investors.

Who is the man in question?

Abul Khayer is currently serving as deputy registrar in the Department of Cooperatives.

In addition to trading through a beneficiary owner (BO) account under his own name, Khayer also trades shares using multiple BO accounts opened in the names of relatives, family members, and social organizations, all of which he controls.

According to the enforcement report, Khayer personally testified on behalf of himself and his family members at commission hearings following each allegation of stock manipulation.

Laws and penalties violated in stock trading

According to a report prepared by the commission, Hiru and his friends are a criminal case punishable under Sections 17(e)(v), (1) and (ii) of the Securities Act, which attracts a minimum fine of Tk 5 lakh and will be filed.

They also violated M&A rules by purchasing more than the stipulated 10% stake in some companies.

Article 17 of the Securities and Exchange Regulations states that no person shall, directly or indirectly, engage in the sale or purchase of any securities for the purpose of promoting, discouraging, influencing, preventing or in any way influencing or turning to his own advantage the sale or purchase of any securities.

Clause (e) of Article 17 adds: “No person shall engage in, or omit to undertake, any act, practice or course of dealing which operates or may operate as fraud, deception or manipulation on any person. In particular, no person shall make any fictitious offer or create a false or misleading appearance of active trading in any security.”

In addition, the rules state that no person shall directly or indirectly influence a series of transactions in any security for the purpose of creating the appearance of active trading, artificially raising the price to induce others to buy, or lowering the price to encourage sales.

Regarding penalties, the ordinance states that anyone who violates the provisions of Section 17 shall be punishable with imprisonment for a term not exceeding five years or with a fine of not less than Rs 5 lakh or with both.

According to a report prepared by the Enforcement Directorate, capital gains from Khayer and Associates’ manipulation of IPDC shares amounted to Tk 6.61 billion, while Khayer personally earned Tk 2.24 billion and his father earned Tk 4.11 billion.

In terms of unrealized capital gains, Khayer, his wife, father and DIT Cooperative earned gains of Tk 12.95 billion, Tk 2.03 billion, Tk 3.28 billion, Tk 1.97 billion and Tk 1.35 billion respectively. .

Despite these significant profits from manipulation, the commission fined Khayer only Tk 1.5 billion.

Additionally, Khayer and his associates’ unrealized capital gains from manipulation of NRB Commercial Bank shares totaled Tk 23.33 billion. In this case, Hiru’s relative Konika Afroze and her friends were fined Tk 3.75 billion.

Abul Kalam Matber and his associates made gains amounting to Tk 14.35 billion through manipulation of One Bank shares, while unrealized gains amounted to Tk 14.35 billion. Matber and his associates were fined Tk3 crore.

Hiru’s wife Sadia Hasan and her associates made capital gains of Tk 1.88 lakh while unrealized gains of Tk 57 lakh through manipulation of Green Delta Insurance shares. Sadia Hasan and her associates were fined Tk 42 lakh for violating share trading laws.

Khayer’s name was also linked to the manipulation of Dhaka Insurance shares. He made capital gains of Tk 4.36 lakh and unrealized gains of Tk 95 lakh by buying and selling shares through his and his wife’s BO accounts. Sadia Hasan and her associates were fined ₹ 95 lakh for violating stock transaction laws.

Hiru was also fined for manipulating shares of Asia Insurance Ltd. Desh Ideal Trust Co-operative, of which Hiru is the managing director, earned Tk 3.24 crore from share manipulation in the insurance sector while making unrealized gains of Tk 5.24 crore. Crore. Desh Ideal was fined ₹72 lakh by the commission for his role in stock manipulation.

Capital gains from Matber and his associates’ manipulation of Fortune Shoes shares amounted to Tk 6.13 billion, while unrealized capital gains amounted to Tk 23.89 billion. The commission imposed a fine of ₹1.50 crore on Matber and his associates for violating securities laws and engaging in manipulation.

The commission also imposed a fine of ₹ 55 lakh on DIT Co-Operative Ltd and its partners for manipulation of BDCOM Online shares. Capital gains from this manipulation amounted to Tk 1.70 billion and unrealized gains amounted to Tk 2.71 billion.

Additionally, the commission found that DIT Co-Operative and Sadia were involved in the manipulation of shares of Bangladesh National Insurance Corporation. As a result, the commission imposed a fine of Tk 35 lakh on DIT Cooperative and Tk 1.40 crore on Sadia and her partners.