The ministry of finance (MoF) has decided, as part of its short-term action programme, to undertake investigation against the key players whose names came out in the recent report of a probe committee on the stock market scam and the individuals who had taken large private placements of shares hiding their addresses and to examine the KYC (know your client) criteria of the top share traders between December 2010 and January, 2011.
The MoF's action programme has been taken in the light of the report of the four-member probe committee, headed by Khandker Ibrahim Khaled, chairman of Bangladesh Krishi Bank (BKB) and a former deputy governor of Bangladesh Bank (BB).
Besides, the role of the country's two stock exchanges -- Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) -- will be fully investigated for reasons of providing price sensitive information to different companies, their failures to demutualise and lack of coordination with the securities' regulator and also for not delisting the non-functional companies, under the short-term action programmes of the MoF.
Also under the short-term measures, as recommended by the MoF, regulations will be made on preference and transactions involving share prior to their initial public offerings (IPOs) and shadow accounts under the Omnibus accounts will be examined and the shadow accounts will be converted into individual accounts within the next three months.
Furthermore, the share prices will be fixed under constant price method; book building system will be re-introduced; extensive investigations will be initiated against one Golam Mostafa for his 'dubious' trading in the capital market; and punitive action will be taken against individuals involved in serial trading.
However, the MoF termed the probe committee's report as partial and being based on perception.
The observations of the MoF, along with its 35-point immediate, short-and medium-term action programmes, will soon be placed to Prime Minister Sheikh Hasina for approval, a top official sources said.
The action programmes, as proposed by the ministry, are largely based on the recommendations made by the probe committee.
"After reviewing the entire probe committee report, it is found that it (the report) is based on perception in many cases," according to the MoF's observation on it.
The report by the probe was not prepared fully in the light of its terms of reference (ToR), set by the Securities and Exchange Commission (SEC), as it did not highlight three major areas that were included in the ToR, according to the observation made by the MoF.
The report has not made any comparison of the rates of return on profits arising out of investment in savings instruments and banks and gains on long-term investment in the capital market in 2010, it said, referring to the ToR of the committee.
The probe committee's report on capital market scam also did not make any detailed analysis about how the small investors were affected after they had invested their money in the initial public offerings (IPOs), as it was assigned under its ToR, according to the ministry.
The report also did not carry any review that it was expected to do under its ToR, to highlight on the liquidity situation of the market during the steep fall of share prices, it further said.
Besides, the it did not mention anything about Tk 15 billion that was pumped out from general investors through private placements of shares, the observation noted.
Also, it did not give any opinion on the existing scurrilities-related laws and regulations.
Meanwhile, the MoF under its medium-term action plan will take the move to amend the clause 26(2) of Bank Company Act in order to limit effectively the investment of banks in the capital market, undertake punitive actions against those banks that had invested in the capital market in 2009 and 2010 beyond the maximum permissible limit defying the directives of Bangladesh Bank and re-examine the re-valuation of Libra Infusion, Sonali Ash Industries, Rahim Textiles, BD Thai Aluminum, Orion Infusion Ltd, Ocean Containers Ltd, Shinepukur Ceramics and Eastern Insurance.
The reconstituted SEC will examine and investigate against 50 top companies, whose share values shot abnormally in 2009 and 2010, according to the decision of the MoF.
Besides, measures like imposing a ban on transfer of right shares within three years after those being credited, investigating into the SEC officials involvement in 'unlawful and immoral' approval of preference and right shares of different companies, and formation of an Action Committee to identify other manipulators in the share market as well as ensuring their punishment, will come under the medium-term measures of the MoF.
According to the MoF's decision, the re-constituted SEC will send the cases of irregularities of BD Thai Aluminum and JEM Global to the CID of police for elaborate investigation. The 'alleged' irregularities of KPCL will be examined by a joint task force of SEC, Bangladesh Bank (BB) and National Board of Revenue and the 'dubious' share businesses of one Md Abdus Salam and another Shamima Sharif will also be investigated, the MoF decided.
The SEC and BB will examine the Public Issue Rules, 2006 and propose amendment to the rules.
The MoF is of the view that investigation is needed to unearth the alleged 'influence' of Salman F. Rahman and Rakibur Rahman over transactions in the capital market and also about its governance.
The MoF's action programme has been taken in the light of the report of the four-member probe committee, headed by Khandker Ibrahim Khaled, chairman of Bangladesh Krishi Bank (BKB) and a former deputy governor of Bangladesh Bank (BB).
Besides, the role of the country's two stock exchanges -- Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) -- will be fully investigated for reasons of providing price sensitive information to different companies, their failures to demutualise and lack of coordination with the securities' regulator and also for not delisting the non-functional companies, under the short-term action programmes of the MoF.
Also under the short-term measures, as recommended by the MoF, regulations will be made on preference and transactions involving share prior to their initial public offerings (IPOs) and shadow accounts under the Omnibus accounts will be examined and the shadow accounts will be converted into individual accounts within the next three months.
Furthermore, the share prices will be fixed under constant price method; book building system will be re-introduced; extensive investigations will be initiated against one Golam Mostafa for his 'dubious' trading in the capital market; and punitive action will be taken against individuals involved in serial trading.
However, the MoF termed the probe committee's report as partial and being based on perception.
The observations of the MoF, along with its 35-point immediate, short-and medium-term action programmes, will soon be placed to Prime Minister Sheikh Hasina for approval, a top official sources said.
The action programmes, as proposed by the ministry, are largely based on the recommendations made by the probe committee.
"After reviewing the entire probe committee report, it is found that it (the report) is based on perception in many cases," according to the MoF's observation on it.
The report by the probe was not prepared fully in the light of its terms of reference (ToR), set by the Securities and Exchange Commission (SEC), as it did not highlight three major areas that were included in the ToR, according to the observation made by the MoF.
The report has not made any comparison of the rates of return on profits arising out of investment in savings instruments and banks and gains on long-term investment in the capital market in 2010, it said, referring to the ToR of the committee.
The probe committee's report on capital market scam also did not make any detailed analysis about how the small investors were affected after they had invested their money in the initial public offerings (IPOs), as it was assigned under its ToR, according to the ministry.
The report also did not carry any review that it was expected to do under its ToR, to highlight on the liquidity situation of the market during the steep fall of share prices, it further said.
Besides, the it did not mention anything about Tk 15 billion that was pumped out from general investors through private placements of shares, the observation noted.
Also, it did not give any opinion on the existing scurrilities-related laws and regulations.
Meanwhile, the MoF under its medium-term action plan will take the move to amend the clause 26(2) of Bank Company Act in order to limit effectively the investment of banks in the capital market, undertake punitive actions against those banks that had invested in the capital market in 2009 and 2010 beyond the maximum permissible limit defying the directives of Bangladesh Bank and re-examine the re-valuation of Libra Infusion, Sonali Ash Industries, Rahim Textiles, BD Thai Aluminum, Orion Infusion Ltd, Ocean Containers Ltd, Shinepukur Ceramics and Eastern Insurance.
The reconstituted SEC will examine and investigate against 50 top companies, whose share values shot abnormally in 2009 and 2010, according to the decision of the MoF.
Besides, measures like imposing a ban on transfer of right shares within three years after those being credited, investigating into the SEC officials involvement in 'unlawful and immoral' approval of preference and right shares of different companies, and formation of an Action Committee to identify other manipulators in the share market as well as ensuring their punishment, will come under the medium-term measures of the MoF.
According to the MoF's decision, the re-constituted SEC will send the cases of irregularities of BD Thai Aluminum and JEM Global to the CID of police for elaborate investigation. The 'alleged' irregularities of KPCL will be examined by a joint task force of SEC, Bangladesh Bank (BB) and National Board of Revenue and the 'dubious' share businesses of one Md Abdus Salam and another Shamima Sharif will also be investigated, the MoF decided.
The SEC and BB will examine the Public Issue Rules, 2006 and propose amendment to the rules.
The MoF is of the view that investigation is needed to unearth the alleged 'influence' of Salman F. Rahman and Rakibur Rahman over transactions in the capital market and also about its governance.
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