The report of the white paper preparation committee has revealed that the shameless impunity of the gang members has brought the capital market to its worst position despite the evidence of their involvement in manipulation during the last 15 years of the Awami League government. The members of the manipulation circle committed fraud during the initial public offering (IPO) of the company during the Awami League government. Has committed fraud, placement-trading and share manipulation. 1 trillion or 1 lakh crores of people have been embezzled through these.
Market insiders say that what has happened in the past year has been in collaboration with the market regulator Bangladesh Securities and Exchange Commission (BSEC). BSEC has intervened so much in the market to favor various quarters of the government; Which goes without saying. Some such instructions came one way in the morning, another in the afternoon. After the 2010 crash, the two commissions overseeing the market approved IPOs of bogus companies. Encouraged to trade placements. And gave immunity to those involved in share manipulation. Market management has failed. As a result, Bangladesh's capital market is one of the worst in Asia.
According to the investigation report, investors have lost confidence in the capital market due to irregularities in the past year. They are stuck now. Because no legal action was taken based on the 2010 inquiry committee report; Instead, those named in the investigation report have been acquitted, and the common investors have suffered. The loss is not only to investors; Rather, in terms of market capital, the country's capital market is ahead of only Cambodia among Asian countries.
According to a 2023 study by the private research organization Center for Policy Dialogue (CPD), 50 percent of traders say that transactions in the capital market are done through manipulation. 53.1 percent traders feel that there is weakness in the activities of BSEC in managing the market. 50 percent of companies in the market have financial reporting irregularities. Apart from this, 56.3 percent of the companies entering the market through IPO are weak companies. 2022 is the peak year for weak companies.
When asked about this, Dhaka Stock Exchange (DSE) director Minhaj Mannan Emon told Ajker newspaper, 'Thank you to the committee for highlighting 15 years of corruption and irregularities in the white paper report. During the previous government, all stakeholders spoke against those involved in the share manipulation cycle besides not allowing IPOs to weak companies, but they did not heed; Rather, Prof. Khairul Hossain and Shibli Rubaiyat-ul-Islam Commission approved IPOs of bad companies in unscrupulous circles without any regard for the rules. He also gave impunity to the share manipulation cycle. These two people are responsible for the deterioration of the stock market. I demand maximum punishment for them.'
According to the report, a large network of manipulations developed between 205 influential entrepreneurial groups, issue managers, auditors and investors in the capital market over the past year. Market intermediaries have gone bankrupt, their equity has gone negative by Rs 30,000 crore. Those who are criminals in the banking sector, they were also behind destroying confidence in the capital market.
The white paper on manipulation said the disaster revealed how powerful business groups and the politically influential manipulate share prices to the detriment of ordinary investors. Despite the public outcry and investigation, many of the key players behind the manipulation have avoided prosecution on political immunity.
The white paper on how capital markets are manipulated states that a number of influential investors and institutions violate securities laws by trading among themselves to artificially inflate share prices. They deal in shares of 'targeted' companies, where some investors sell shares and investors associated with them buy shares. This is how the active face of the company's share trading is shown. The book building process is manipulated in such a way that the valuation of the company is not understood.
Interest groups have taken over some major mutual funds, the white paper said. In this case BSEC was looking the other way. Khairul Commission extended the tenure of closed mutual funds by an additional 10 years. Investors' confidence has fallen.
According to the white paper, with the increase in the index in the capital market, a rule has been made to increase the ratio of margin loans. This fueled the rise of the capital market. The BSEC often tries to maintain the index by ignoring the rise in share prices. Whenever the price starts to fall, the activity of the regulatory body starts. The most controversial floor price system has tarnished the reputation of capital markets internationally. Through this the transactions of good companies have been damaged but the market manipulation has been encouraged.
When asked about this, DSE Brokers Association of Bangladesh (DBA) president Saiful Islam said, 'Through the white paper, everyone at home and abroad got to know what happened in the capital market in the last 15 years. We believe that the government will take future plans to cover the losses that investors and capital markets have suffered as a result of the anarchy of the past. The new plan should have instructions on how to keep the market healthy, restore investor confidence. Only then we can bring investors.'
