Government official Abul Khayer, aka Hiru, is a big investor in the capital market, big enough to influence it the way he wants: when he buys a share, others follow suit because they know it will be a sure shot. Using this huge influence, he manipulated the price of many stocks, making a quick profit in the process.

Fish such manipulations in about a dozen companies, the Bangladesh Securities Commission (BSEC) fined him and his associates at different times. in 2022. As they failed to pay the fine within the stipulated time, the regulatory authority has now filed four cases for recovery of dues.

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

Almost two years have passed, but Khayer and his family members have paid only about Rs 5 million till October 15, the officials added.

OCEMN spokesperson Rezaul Karim told The Business Standard that the Enforcement Department has filed four certified cases against the defendants to recover outstanding fines.

As the defendants failed to pay the fines within the stipulated 30-day deadline, the previous commission, headed by Shibli Rubayat-Ul Islam, who resigned days after the fall of Sheikh Hasina’s government on August 5, extended the deadline by a year.

Khayer sought an additional year to clear the outstanding amount of about Tk 10 million in 12 installments. But on September 18, the commission rejected the request and proceeded to classify the files.

The commission once extended the time to pay the remaining amount, but I could not pay the fine because the market was not good.

Abul Khayer

When asked, Abul Khayer told TBS, “We have paid Tk5-6 million of the commission’s fine.”

He added: “The commission once extended the payment period for the remaining amount, but I could not pay the fine because the market was not good and I could not sell shares.”

According to an enforcement report, Khayer and his associates were involved in manipulating the shares of 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 fined Khayer, his wife Kazi Sadia Hasan, his father Abul Kalam Matber and his companies, DIT Co-operative and Desh Ideal Co-operative, about 14 million lei in 2022 after obtaining evidence of stock manipulation in 11 companies, including several in the insurance sector.

According to BSEC enforcement department reports, their realized capital gains were around Rs 50 crore, while their unrealized capital gains were around Rs 100 crore.

Realized capital gains refer to the profit made after buying and selling shares, while unrealized capital gains occur when shares have been bought but not yet sold despite being available for sale.

Khayer and his associates faced new fines for their involvement in the manipulation of Paramount Insurance shares.

On September 24, the commission imposed a fine totaling Tk 1.63 million 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 Tk75 lakh, followed by Tk50 lakh for Shakib, Tk25 lakh for Khayer and Tk1 lakh each 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. The letter, a copy of which was obtained by TBS, stated that Khayer, a government employee, along with his associates manipulated the stock transactions of various companies in the capital market at different times. This manipulation caused significant losses for general investors, undermining market development.

Who is the man in question?

Abul Khayer is currently Deputy Registrar in the Department of Cooperatives.

In addition to trading through a beneficial owner (BO) account under his own name, Khayer engaged in share trading using multiple BO accounts opened in the names of his relatives, family members and social organizations, all of which he controlled.

According to an enforcement report, Khayer personally submitted statements on behalf of himself and his family members during commission hearings after each charge of stock manipulation.

Laws violated in the trading of shares and penalties

According to a commission report, Hiru and his associates have committed offenses punishable under Sections 17(e)(v), (1) and (ii) of the Securities Act, which carry a minimum fine of Tk5 lakh and the potential of a criminal case to be filed.

In addition, by purchasing more than 10% of the prescribed shares in certain companies, they violated the rules of acquisition and takeover.

Section 17 of the Securities and Exchange Ordinance provides that no person shall, for the purpose of inducing, discouraging, effecting, preventing or influencing or directing in any way to his advantage, the sale or purchase of any security, whether directly or indirectly.

Sub-section (e) of Section 17 adds: “No person shall engage in any act, practice or course of business or omit to do any act which operates or would operate as a fraud, deception or manipulation upon any person. in particular, no person shall make any fictitious quotation or create a false and misleading appearance of active trading in any security.”

In addition, the rules provide that no person shall directly or indirectly affect a series of transactions in any security to create the appearance of an active transaction, to artificially increase the price to induce others to buy, or to reduce the price to induce sales.

As regards punishments, the ordinance provides that whoever contravenes the provisions of section 17 shall be punished with imprisonment for a term which may extend to five years, or with fine not exceeding 5 lakhs, or with both.

According to an Enforcement Department report, the capital gains made from the manipulation of IPDC shares by Khayer and his Associates amounted to Tk 6.61 million, with Khayer personally earning Tk 2.24 million and his father earning Tk 4.11 million Tk.

In terms of unrealized capital gains, Khayer, his wife, his father and DIT Co-operative realized gains of Tk 12.95 crore, Tk 2.03 crore, Tk 3.28 crore, Tk 1.97 crore and, Tk 1.35 crore respectively.

Despite these substantial profits from manipulation, the commission fined Khayer only Tk 1.5 million.

In addition, the unrealized capital gains of Khayer and his associates from the manipulation of NRB Commercial Bank shares totaled Rs 23.33 crore. In this case, Konika Afroze, a relative of Hiru, and her associates were fined R3.75 million.

Abul Kalam Matber and his associates made gains of Tk 14.35 million by manipulating the shares of One Bank, unrealized gains were also Tk 14.35 million. Matber and his associates were fined 3 million euros.

Hiru’s wife Sadia Hasan and her associates made capital gains of Tk 1.88 million by manipulating shares of Green Delta Insurance with unrealized gains of Tk 57 lakh. For violating the laws on share trading, Sadia Hasan and her associates were fined 42 lei.

Khayer’s name has also been linked to manipulation of Dhaka Insurance shares. He made capital gains of Tk 4.36 million by buying and selling shares through his own and his wife’s BO accounts with unrealized gains of Tk 95 lakh. Sadia Hasan and her associates were fined 95 lei for violating share trading laws.

Hiru was also fined for stock manipulation in Asia Insurance Ltd. Desh Ideal Trust Co-operative, of which Hiru is the managing director, made Tk 3.24 million in stock manipulation in the insurance sector, with unrealized gains of 5 .24 Tk. crore. Desh Ideal was fined 72 lei by the commission for its role in stock manipulation.

The capital gains realized by Matber and his associates from the manipulation of Fortune Shoes shares amounted to Tk 6.13 million, while the unrealized capital gains were Tk 23.89 million. The commission fined Matber and its associates 1.50 million lei for violating securities laws and engaging in manipulation.

The commission also fined DIT Co-Operative Ltd and its associates Tk55 lakh for manipulating BDCOM Online shares. Capital gains realized from this manipulation amounted to Tk 1.70 crore with unrealized gains of Tk 2.71 crore.

In addition, the commission found that DIT Co-Operative and Sadia are involved in the manipulation of the shares of Bangladesh National Insurance Company. As a result, the commission fined DIT Co-Operative Tk35 lakh and Sadia and its associates Tk1.40 crore.