The Bangladesh Securities and Exchange Commission (BSEC) has launched an investigation into allegations of mutual fund price manipulation and paid investment advice involving Md Ashraful Islam.
In an order issued on 13 October, the regulator formed a three-member committee to examine Ashraful's trading in five mutual funds, his links with brokerage houses, alleged coordinated transactions to influence prices and any financial gains from such activities.
The committee comprises BSEC Additional Director Sultana Parveen and Assistant Directors Lamia Akter and Md Kamal Hossain. It has been asked to submit its findings and recommendations within 60 working days.
The five funds are EXIM Bank 1st Mutual Fund, Phoenix Finance 1st Mutual Fund, MBL 1st Mutual Fund, Prime Finance First Mutual Fund and ICB AMCL Sonali Bank Limited 1st Mutual Fund.
According to the BSEC order, the probe team will examine the timing and volume of Ashraful's unit purchases and sales, funding sources and beneficiary owner (BO) accounts linked to him. Investigators will determine whether he or people acting in concert with him controlled or operated those accounts.
The committee will also examine whether synchronised, matched, circular or pre-arranged transactions were used to create a false or misleading appearance of active trading or artificially influence prices.
The BSEC has directed the team to scrutinise Ashraful's activities on Facebook, WhatsApp, Telegram and other social media platforms, including whether he offered investors specific purchase prices, price targets or trading instructions in exchange for payments.
The investigation will also assess whether he provided investment research, analysis or advice without required registration or authorisation, and whether he or anyone acting in concert with him possessed, communicated or used unpublished price-sensitive information.
The role of brokerage houses will also be examined, including Ashraful's alleged control or influence over branches of two brokerages in Uttara, including Arena Securities Ltd. Investigators will determine whether the firms or their officials provided unauthorised trading, margin facilities or other assistance.
The committee will calculate any trading profits or other financial benefits obtained by Ashraful or his associates, if any, and identify any securities laws, rules, regulations or directives that may have been breached.
The BSEC issued the order under Section 21 of the Securities and Exchange Ordinance, 1969, and Section 17A of the Bangladesh Securities and Exchange Commission Act, 1993, citing the interests of the capital market and investors.
The order sets out allegations and issues for investigation and does not establish that Ashraful Islam or anyone else committed a securities law violation.