Some members of the Board of Directors of Dhaka Stock Exchange (DSE) had link behind the recent massive fall in the share markets, according to an inquiry.
Regulatory organization Bangladesh Securities and Exchange Commission (BSEC) conducted the inquiry and found their involvement.
That is why BSEC has served show cause notice to the DSE Board of Directors, Managing Director (MD), and Chief Regulatory Officer (CRO).
Alongside, the regulatory body also asked them to appear at hearing in this reagrding scheduled on February 9.
Earlier on July 21, 2019, BSEC formed an inquiry committee to look into the turmoil situation in stock markets. The committee found link of the country's prime bourse with the unsual fall.
The inquiry body found that some members of the DSE Board of Directors disclosed some price sensitive information (PSI) related to capital market to the media that influenced the market.
Despite revealing the PSI is stringent regulations, the exchange's board members publicly expressed their opinion which contributed the recent downfall of the market as a whole hence affected the general investors inusually.
BSE in its probe also found that chief regulatory officer-led DSE regulatory affairs division failed to discharge its responsibilities by not creating regular awareness among the capital market participants.
Regarding ACI Ltd, BSEC investigation is that DSE formed an enquiry body regarding the huge loss of a subsidiary of the company (listed Co.) and eroding profit of its parent Co. as per news of daily newspapers published on February 14, 2019, which was beyond DSE jurisdiction.
The enquiry also said some of the directors and committee members have made statements before media that the recent published financial statement of ACI Ltd was manufactured and fabricated and their explanation on the issue before the enquiry committee was not satisfactorily and the report will be sent to the Commission for further enquiry in this regard - as per news of different daily newspapers published on May 29, 2019 which is unprecedented and total non-compliance of related securities laws.
BSEC also found that market price of ACI Ltd decreased 33% during December 2018 to June 2019, which was also within the period of DSE's enquiry. This indicates a relationship between the negative trend of price of ACI Ltd and the said inquiry.
The drastic fall of the securities has huge impact on the recent fall of index. The above mentioned negative statements about financial statement was the main reason to downward trend of share price of ACI Ltd.
BSEC said DSE and its directors have no jurisdiction to form and conduct such inquiry committee against any listed company as per securities laws but can so subject to prior approval of the Commission.
In this case, DSE conduct the investigation without prior consent of the Commission that went against regulation 54 (1) of the Stock Exchange (listing) Regulations, 2015.
The Commission in the probe also found that the directors and members of the Committee violated the Code of Conduct and ethics for the Directors of the Board of DSE.
Contravention:
Through the aforesaid activities, it appeard that DSE have contravened regulation 9 (5), DSE CRO violated regulation 16 (3), DSE ignored regulation 54 (1), and members of the said Committee namely Justice Siddique Rahman, Independent Director, Rakibur Rahman, shareholder Director, Mihaz Mannan Emon, Shareholder Director, Monoara Hakim Ali, Independent Director, Prof Dr Masudur Rahman, Independent Director and Abdul Matin Patwary, CFO of the DSE violated regulations 8 (2) and 9 (5) of the Dhaka Stock Exchange (Board and Administration) Regulations, 2013 respectively.