White Paper: Influential Frauds Controlling Equity Market in Hasina’s Regime

A recent White Paper on the state of the Bangladesh economy has revealed some troubling trends in the country’s equity market. According to the report, trillions of dollars have been embezzled from the stock market through fraudulent activities such as manipulation, placement shares, and IPOs.

The report highlights how powerful investors and institutions have been artificially inflating share prices by engaging in serial trading among themselves, which is a clear violation of securities laws. This manipulation has led to false impressions of active trading in certain stocks, allowing these entities to profit by offloading overvalued assets.

The same group of influential individuals that was involved in the banking sector crisis has also been identified as being behind the debacle in the stock market. During Sheikh Hasina’s regime, an average of $16 billion per year was siphoned off from Bangladesh, leading to an economic crisis when she fled the country following a mass uprising.

One of the key issues identified in the report is the lack of foreign participation in the capital market due to concerns over corruption and a lack of transparency. This has resulted in the market being dominated by domestic investors, dragging down the equity market’s growth.

The report also points out flaws in the IPO valuation process, stating that sponsors have an upper hand over general investors in the secondary market due to anomalies in the valuation process. Moreover, stock market intermediaries have suffered bankruptcy, with some big-ticket mutual funds being taken over by vested interest groups.

In an effort to address the market’s decline, the Bangladesh Securities and Exchange Commission (BSEC) implemented a floor price system in March 2020 to prevent stock prices from falling below a certain level. However, this restriction severely hurt market liquidity and did not effectively curb price manipulation involving junk stocks and weak companies.

Overall, the report paints a grim picture of the stock market in Bangladesh, highlighting the need for greater transparency, investor protection, and institutional investment. It calls for regulatory reforms to prevent further manipulation and embezzlement in the market, as well as for a mechanism that will encourage private investment and market development.