SEC Annual Report,1997-98 


The inspection of the books of accounts and other records of broker dealer of Dhaka Stock Exchange (DSE) & Chittagong Stock Exchange (CSE) by inspection team of SEC started in November 1997. Since then 29 Brokers/Dealerís books of accounts have been inspected. The Stock Exchange wise position is shown below:-

Sl. No. Name
1. Dhaka Stock Exchange
2. Chittagong Stock Exchange

Inspection Reports, pointing out the irregularities found and suggesting remedial measures to be taken, have been issued with copies to Chief Executive Officer & Chairman/President DSE/CSE.


A Surveillance Team was formed in December, 96 to protect the interest of the investors and to bring transparency at the DSE. The Team of SEC engaged in inspection is also responsible for Market Surveillance. Members of the Team used to attend the DSE floor daily and observe trading and submit Daily Report to the SEC with observation. In many cases letters were issued for delayed disclosure of sensitive information by issuer, default in payment, or submission of share to the clearing house by broker dealer etc.


After automation, the trading of DSE is being watched through a non-trading version of Trading Workstation installed at SEC. The DSE has bought one user surveillance. For trading done at CSE, the surveillance team of SEC monitor the same though surveillance software installed at SEC. The team submit daily report to the chairman & other, pointing out any abnormal activity.
Efforts are underway to improve MIS of SEC so that market can be monitored more quickly & effectively from the data base.


(i)  On the basis of report of Surveillance Team, the SEC formed an inquiry committee to investigate and report about an alleged price manipulation. The committee after detailed inquiry found that the issuer company in connivance with broker dealer firm, have manipulated the price of the companyís share. The company was fined Taka one lakh and the 2 brokerage firms were suspended form trading at the Stock Exchange.

(ii)  The surveillance team, observed that 2 brokerage firms have been buying most of the shares of a particular company for a considerable time, without selling. Through the prices of all other companies shares have been falling along with all shares price index, the price of the share of this particular company managed to remain more or less static, because of huge purchases by these two particular brokerage firms. The inspection of the books of accounts of the 2 brokerage firms revealed several unusual and unexplainable dealing. SEC formed an inquiry committee in June, 98 for detailed investigation. The committee requested the 2 firms to furnish some information. One firm furnished but the other firm at first sought extension of time, which was granted, ten filed a writ petition to the Honorable High Court and got a stay order for not furnishing the desired information. The DSE has filed an appeal to the court, it is pending.

(iii)  In another case, it was found that about 79% of the share of a particular company transacted were done by a particular brokerage firm. Their books of record were examined and then a inquiry committee was formed. The committee has submitted report which is under study by the relevant department of SEC.  

(iv)  During the 1st week of June 98 the share prices of some of the companies recorded phenomenal rise, though there were no sensitive informationís like issue of bonus share, declaring of dividend etc. A 3 members task force including one from DSE has been constituted. The task force is looking into the matter.
(v)  In one case the brokerage firm refused to supply records/documents to officer of inspection team of the SEC, on the plea that the requisition for document should come from the commission. The officer making he requisition tried to convince him that he has been authorized by SEC to conduct inspection but the firm did not furnish paper. Then the Commission called for explanation, which on receipt found unsatisfactory. Taking a lenient view, because inspection of brokerage firms have started recently and many are not aware of rules, the firm has been let off with a warning to be careful in future. 

(vi)  Task Force : The Commission constituted a Task Force on 25th June 1998 authorizing Mr. Khairul Anam Khan, Corporate Accountant and Mr. Shuvro Kanti Chowdhury, Deputy Director, SEC under Section 6 of the Securities and Exchange Ordinance, 1969 for the purpose of inspecting the Books of Accounts, Records etc. of the Members concerned of Dhaka Stock Exchange in connection with trading in the securities during the period of May-June 1998. DSE nominated its Secretary Mr. Md. Rezaur Rahman as a Member of the Task Force.

(vii)  Under Section 21 of the Securities and Exchange Ordinance, 1969 the SEC constituted an Inquiry Committee on 15th June 1998 comprising Mr. Khairul Anam Khan and Mr. Shuvro Kanti Chowdhury, Corporate Accountant and Deputy Director of SEC respectively to inquire into the affairs and records of the concerned Stock Dealers/Brokers and Security Issuer etc. in respect of trading of shares of Mark Bangladesh Shilpa and Engineering Limited to ascertain as to whether there was/were any trade/price manipulation and/or insider trading and/or irregularities/violation of securities laws.