The Bangladesh Securities and Exchange Commission (BSEC) will take strict measures against the spread of misinformation on the stock market as it leads to gambling and has an overall negative impact on general investors, according to a senior regulatory official.
"We are bringing a number of Facebook pages and other websites under our radar to monitor whether they spread stock market related information or advice," he said.
As per regulations, no one is allowed to provide advice on investment strategies without securing an advisory certificate from the stock market regulator.
A number of websites and Facebook pages are said to be engaged in such activities and if the allegations prove to be true, the BSEC will take stern actions against them.
A Facebook page titled "Decision Maker" was shut down based on the stock market regulator's request to Bangladesh Telecommunication Regulatory Commission just last Thursday for breaching regulations.
"We will shut down all the pages that are spreading rumours and we will take legal actions against them as well," the BSEC official added.
The BSEC recently urged investors to disregard any possible rumours as it could adversely affect their investment strategies.
However, they still pay heed to those rumours as evinced by their activities, which closely match the advice provided on stock market related Facebook pages.
A number of investors even depend on such hearsay to buy and sell shares while the administrators of these Facebook groups and websites are happy to oblige, the BSEC official said.
As a result, junk stocks witnessed a rising trend just a few days ago when the stock market regulator declared long-term plans aimed at improving the performance of such companies.
The BSEC had made it mandatory to reform a company's board of directors if said companies remain in the Z category, which is reserved for junk stocks, for two years or more.
Besides, directors will also be removed if they are in multiple listed companies or market intermediaries.
Moreover, firms that fail to improve their performance within the stipulated timeframe will face special audits while observers will be appointed to restore good governance in those companies.
If a company remains in the Z category for four years though, then the commission may take more stringent measures, which includes delisting the company.
"But stock investors misjudged the regulator's initiative and so, junk stocks sold like hot cakes at the country's bourses a few days back," said a senior stock broker.
Many general investors though that the junk stocks would become profitable sooner rather than later due to the steps taken by the BSEC.
"Their thinking was fuelled by rumours," he added.
According to various market analysts, it would be wise to refrain from making major investments in non-performing companies as such junk stocks tend to be overpriced.
Still, people seem to have a hankering for these non-performing investments due to the rumours, they said, adding that this was why the stock market regulator was taking a proactive approach to stem the flow of misinformation.
On September 2, the BSEC issued a notice saying that no one should advise others on how to buy or sell listed stocks based on their own opinions.
"If anyone does do it though, then we will take action," the notice said.