The managing director of Beacon Pharmaceuticals has been identified as a manipulator of the stock of Khan Brothers PP Woven Bag Industries in 2023 and accordingly penalized for the misconduct.
He, however, acted in collaboration with his kith and kin and his company officials. Now, all of them are facing an aggregate penalty of Tk 8.7 million.
The individuals and companies that will have to pay the fines are Mohammad Ebadul Karim, managing director of Beacon Pharmaceuticals; Risana Karim, Ulfat Karim, Beacon Medicare, Beacon Medicare Employees CPF, Beacon Developments, Md Sohel Alam, Mijanur Rahman, Md Azad Hossain Patwary, Md Nasir Hossain and Md Akter Hossain.
The securities regulator asked them to deposit the money within 30 working days from March 19 and warned of further actions for non-compliance.
The Bangladesh Securities and Exchange Commission (BSEC) also fined four individuals and 21 companies Tk 17.8 million in total for artificially inflating the stock price of Alltex Industries in 2022.
The fines were imposed following hearings held on the basis of investigation reports submitted by the Dhaka Stock Exchange (DSE). The BSEC announced the penalties on its website on Wednesday.
According to the probe findings, the manipulators had engaged in coordinated transactions within their networks, creating a false impression that the stocks were in high demand even in the bearish market.
The inquiry team randomly examined documents collected from different TREC [Trading Rights Entitlement Certificates] holders of clients who had transacted shares of Khan Brothers and Alltex Industries.
The manipulators artificially drove up the stock prices through multiple brokerage firms and several beneficiary owner’s (BO) accounts.
What happened to Khan Brothers?
The DSE inquiry team looked into Khan Brothers’ price movement between March 5, 2023 and July 13, 2023 on the prime bourse. It learnt that the stock jumped 196 per cent or Tk 19.40 each share to Tk 29.30 per share during the time.
The stock of Khan Brothers closed at Tk 133.2 per share on Wednesday on the Dhaka bourse despite the company’s poor business performance, which indicates that the stock is still subject to artificial rallies. The company made losses of Tk 48 million in the four years to FY23. It then reported a profit of Tk 0.86 million for FY24 and paid only 1 per cent cash dividend for the year.
Analyzing the relevant documents, the DSE team concluded that Beacon Group & associates had directly and indirectly influenced the stock’s movement on the bourse in 2023 by creating a demand for the stock.
Beacon Group further violated the securities rules as it held more than 10 percent stake in Khan Brothers during the period without prior declaration.
As per the securities and exchange ordinance 1969, any investor, who wants to hold or acquire more than 10 per cent shares of a listed company, must announce their intention through the stock exchanges before trading in the shares.
However, they did not follow the rule. So, it is deemed that Beacon Group transacted shares “unfairly” to get benefits, according to the BSEC.
The manipulator gained Tk 1.18 million through price manipulation while unrealized gains amounted to Tk 41.1 million.
The BSEC said Beacon Group’s clarification regarding the transactions was not acceptable. So, it imposed a fine of Tk 8.70 million on Beacon Group and its accomplices.
Stock manipulation of Alltex Industries
The DSE inquiry team conducted an investigation into Alltex Industries’ price movement between December 27, 2021 and March 22, 2022.
During the time, the stock soared 88.6 per cent to Tk 28.1 per share.
Investigators revealed that Md Masudur Rahman, Md Sheikh Jashim Uddin and their associates had traded in shares of Alltex Industries to push the price up.
They influenced buy-and-sell activities in the stock using 28 BO accounts opened with multiple brokerage firms.
They collectively bought 5.12 million Alltex shares and sold 7.11 million, accounting for 27.55 per cent of the total trade volume of the stock during the period.
The manipulators realized capital gains of Tk 20.73 million during the time.
They too have to deposit the fines within 30 working days from March 27. Otherwise, further actions will be taken, said the market watchdog.
https://today.thefinancialexpress.com.bd/stock-corporate/beacon-pharma-md-fined-for-inflating-price-of-khan-brothers-1744825273
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