The move from the securities regulator made many wonders who wanted to know the motives behind the harsh step
Stocks market regulator, Bangladesh Securities and Exchange Commission (BSEC), has served show cause notices to all the directors of Dhaka Stock exchange (DSE) and its managing director for a trifling matter.
The commission also served the notice to its Chief Regulatory Officer (CRO), a top Commission official said.
The BSEC on January 27 served the notices, asking the board members to appear in a hearing on Sunday and explain why actions should not be taken against them for their roles, in questions.
The move from the securities regulator made many wonders who wanted to know the motives behind the harsh step.
Earlier on July 21, 2019, BSEC formed an inquiry committee to look into the turmoil situation in the stock market. The committee found links of the country's prime bourse with the unusual market fall.
The inquiry body found that some members of the DSE Board of Directors disclosed some price sensitive information (PSI) related to the capital market to the media that influenced the market to plunge.
As sharing PSI violate the securities regulation, the exchange's board members publicly expressed their opinions which contributed to the recent downfall of the market as a whole, and affected the general investors in particular, reads the notice.
The enquiry committee in its report said that some members of the board of directors of DSE disclosed some price sensitive information related to the capital market to the print and electronic media rather than disclosing the same through press release, influencing the market through the PSI, the notice added.
Asked, a DSE member, preferring anonymity, said it made no difference for informing the media without any press statement.
“The argument of the BSEC is weak, and cannot be acceptable,” the aggrieved DSE director told Dhaka Tribune.
Another institutional investor said indifference and inaction along with poor leadership of the BSEC had been instrumental for the prolonged slump in the stock business.
“Making the DSE directors and media scapegoat is a ploy to serve a quarter with vested interests,” he said.
The DSE formed an inquiry committee consisting of its directors on unearthing the reasons behind the huge loss of a subsidiary of ACI Limited that eroded profits of its parent company.
A number of DSE directors shared their findings with media on the reasons behind the decline of ACI profit that aggrieved the BSEC, sources said.
The BSEC committee claimed the share price of ACI dropped significantly to Tk240 during December 2018 to June 2019 due to the role of the DSE directors.
However, in February, 2018, share price of ACI was Tk430 that kept on falling uninterruptedly since then, but the commission did not mention the reason for the fall before and after the period.
The EPS of ACI was 22 in 2017 that declined to Tk14.87 in the negative in 2019, which was the prime reason for the drastic fall in share prices, market operators said.
The BSEC said that the DSE did not take its prior approval for inspecting any listed company.
BSEC said DSE and its directors had no jurisdiction to form any inquiry committee and conduct probe against any listed company without the approval from the BSEC.
The Commission in the probe also found that the directors and members of the Committee had violated the Code of Conduct and ethics in the process of formation of the inquiry committee,
A DSE director blamed the approval of weak companies by the regulator for the current market turmoil while BSEC officials blamed the DSE board members for failing to discharge their duties.