FE Report

The securities regulator Tuesday slapped fines worth Tk 18.0 million on some company executives and individuals for breaching the securities rules related to price manipulation and company's rights issue.

The regulator has also ordered to terminate the managing director and the company secretary of the RN Spinning Mills for their involvement in the irregularities of the company's rights offer.

The decisions were taken a commission meeting, chaired by the Bangladesh Securities and Exchange Commission (BSEC) Chairman Professor Khairul Hossain held at the BSEC office.

At Tuesday's meeting, the BSEC also approved the revised guidelines of Mutual Funds including the provision of cash dividend or re-investment of the cash dividends by the unit holders in accordance with the prospectus and document offers.

A top BSEC official said the re-investment will be executed through bonus offers.

"If the unit holders say that they will receive units against their cash dividends then the fund managers will issue bonus against their re-invested cash dividend. But only the mutual funds, which are yet to offload, will be able to issue bonus, as the prospectus of the existing funds do not own the bonus provision," he said.

The RN Spinning last year undertook a rights issue worth 2.78 billion the subscription of the issue closed on March 13, 2012. But the company did not credit the rights shares to the beneficiary owners' accounts within the stipulated timeframe, as the sponsor money was not deposited duly.

After conducting a probe into the company's right issue the regulator filed case against members of the board of directors and company secretary of RN Spinning Mills on October 10, 2012.

At Tuesday's meeting, the size of the company's rights issue was fixed at Tk 1.2 billion in stead of Tk 2.78 billion.

At the same time, the regulator has asked the company to remove the company's managing director and the company secretary.

"The company secretary has also been asked to refrain from carrying out the job for next five years in the capital market related organization," said Saifur Rahman, the BSEC executive director and spokesperson.

For not depositing the sponsor money duly, the regulator imposed a Tk 1.0 million penalty on the company, Tk 2.5 million on the director Ms Shirin Faruq and Tk 5.0 million on each other directors.

At the same time, the individual investor Syed Sirag-ud-ulla will have to pay a penalty of Tk 3.0 million for manipulating the share price of RN Spinning Mills.

For creating price manipulation in the share trading of Fu-Wang Foods, the regulator has slapped fines on three big individual investors and institutional investor.

As per the decision, Abu Sadat Mohammad Sayem will have to pay a fine Tk 0.6 million, Abdul Mubin Molla Tk 1.2 million, Ms Mahmuda Yesmin Tk 4.0 million and Dream Holdings Tk 1.5 million.

For manipulating the prices of Legacy Footwear, Mahbubur Rahman and Mujibul Haq Chowdhury will have to pay a penalty of Tk 1.5 million and Tk 0.2 million respectively.

As per another decision, the investors affected during the 2010-11 stock market debacle will be able to enjoy the quota facility in the IPOs (initial public offering) through joint accounts.

The BSEC has also approved the rights offer of the Phoenix Finance. The company will offer one rights share against 10 existing shares.