Investor fined Tk1cr for insider trading
The capital market regulator has fined Arif Ahmed, an investor and a relative of some sponsor directors of Popular Life Insurance, to the tune of Tk 1 crore for his alleged involvement in stock market manipulation and insider trading.
The Securities and Exchange Commission (SEC) also fined three directors of Popular Life Insurance a total of Tk 20 lakh, a shareholder Tk 5 lakh, and the wife of Arif Ahmed Tk 5 lakh on charges of insider trading.
Insider trading is a form of share transaction carried out for profit on the basis of price sensitive information that has not been disclosed in public.
The fines, which were imposed after an investigation by the stock market watchdog, must be paid to the SEC within the next 15 days from Wednesday, a senior SEC official said.
“All the fines were imposed to maintain discipline and transparency in the market as well as protect the investors' interest,” said Farhad Ahmed, executive director of SEC.
The commission also forfeited Tk 19.12 lakh that a Popular Life Insurance director gained as profit by selling shares in the restrictive period.
The SEC formed a probe body in March to find out why share prices of Popular Life reached Tk 5,000 each in March from Tk 811 in June 2007.
The team found Arif to be the brother of four sponsor directors of Popular Life: Hasan Ahmed, Kabir Ahmed, Farzana Zahan Ahmed and Noorjahan Ahmed, and a cousin of Shabbir Ahmed, another sponsor director.
The investigators also found the insurance company disclosing some price-sensitive information in 2007: the price-sensitive information include acquisition of DSE membership along with 1,000 square feet space in DSE Tower in June 2007, purchase of 5 katha land in Aftabnagar in July, and announcement of 12.5 percent dividends.
From February 2007 to August 2007, Arif bought a total of 1,81,150 shares of Popular Life Insurance through his nine trading or BO accounts. Of the shares, the probe body found that 10,750 were bought just before the disclosure of price-sensitive information, which indicates insider trading. During the seven-month period, he sold 50,350 shares of Popular.
Farhad Ahmed, executive director of SEC, said Arif had violated SEC Ordinance by manipulating the market through his involvement in insider trading .
During a SEC hearing, Arif's representative Hasan Ahmed said although Arif was involved in share business, he was not a director or sponsor of a listed company and did not know the rules and regulations about share transactions.
The SEC inquiry team found that Farzana Naj, wife of Arif Ahmed, bought 22,150 shares of Popular from June 2005 to April 2007, of which 5,700 shares were bought ahead of disclosure of price-sensitive information about dividends. In the same period, she sold 6,750 shares.
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