The Banking Division of the finance ministry has recommended 11 steps to the government as measures to curb stockmarket manipulation.

The recommendations were based on a review of a report submitted by a stockmarket probe committee.

According to the Banking Division, a law should be in place to regulate the issue of preference shares of listed companies.

The Banking Division claimed that Dhaka and Chittagong stock exchanges provided price-sensitive information to different companies and have political persons at the helm.

The division found a lack of coordination between bourses and the Securities and Exchange Commission. The bourses did not de-list companies which were out of operation, nor did they complete demutualisation, it said.

The Public Issue Rules 2006, meant for listed companies, were in contradiction with the goals and objectives of the SEC, it was found.

The price upward trend of the capital market was fuelled by some unethical investors: One investor, Golam Mustafa, for instance, placed buying orders at high prices only to cancel them minutes later. And he had bought shares from other brokerage houses, while he sold through other beneficiary accounts and offered “most unfavourable prices” to manipulate the market, the Banking Division pointed out.

The government should find out the investors who went for big selling from December 10 to January 11, it suggested.

In line with the report, the Banking Division asked the government to investigate the unusual price hike of Chittagong Vegetables that gained 251 percent in 2009 and 4,148 percent in 2010.

The division also asked the government to probe the unusual price hikes of Beach Hatchery, Aftab Automobiles, Safko Spinning Mills, Orion Infusion, Padma Cement, Bextex, CMC Kamal, BD Welding and Singer BD; and Z-category companies, non-operational companies and some fabricated accounts.

The government should also reform the securities law on issuing of rights shares of listed companies, it said.

News: The Daily Star/ Bangladesh/ May-01-2011