Two Chic Textile directors get jail terms for 1996 stock market manipulations

In the first verdict over the 1996 stock market crash, two top officials of Chic Textiles have been found guilty by a court for share price manipulations.

A special tribunal for stock market-related cases sentenced the company’s Managing Director Md Maksudur Rasul and Director Iftekhar Mohammad to four years of rigorous imprisonment.

They have been also fined by Tk 3 million each, failing to pay which, they will have to spend another six months in jail.

The tribunal delivered its verdict on Monday in absence of the duo.

The stock market regulator SEC filed cases against 15 organisations and 36 individuals over price manipulations, which caused the market to crash in 1996, leaving thousands of investors broke.

The then the Securities and Exchange Commission, now Bangladesh Securities and Exchange Commission, filed a case against the Chic Textile officials on Apr 2, 1997.

The case was shifted to the special tribunal after it was formed in June this year. On Jun 28, arrest warrants were issued for the two, who had secured bail from the High Court.

Publicly listed in 1995, the company raised Tk 125.40 million from the market.

In 1996, its share prices rose to Tk 46 from the face value of Tk 7.

Judge Humayun Kabir said Managing Director Rasul operated 828,464 and Director Mohammad another 835,000 shares of the company between July and December 1996.

They violated the Securities and Exchange Ordinance, 1969 by manipulating the prices and harming the shareholders, he added.

The trial concluded on Aug 27 and on Monday the verdict was delivered.

BSEC’s Panel Lawyer Masud Rana said this was the first verdict of a case filed over the 1996 market scam.

The court said the government could use the money, realised as fines from the convicts, for the welfare of the victims.

Lawyer Rana welcomed the verdict saying justice had been served.

Judge Kabir said the jail term for the convicts would start from the day they are arrested or surrender.

Former SEC executive director MA Rashid Khan, Prof Zahurul Haq, Prof Amirul Islam Chowdhury, Moniruddin Ahmed, Ruhul Khaled and Delowar Hossain testified in the case.

Khan is the case’s plaintiff.

Monday’s verdict was the third from the special tribunal formed to deal with cases involving the capital market.

The Dhaka Stock Exchange ended the day’s trade 0.465 percent down.

Stakeholders are hoping the conviction will bring positive results to the capital market.

“It will serve as a warning for the fraudsters,” capital market analyst Prof Mohammad Musa told bdnews24.com.

IDLC Investment Limited’s Managing Director Md Muniruzzaman said the verdict would help the market regain the investors’ trust in the long run.

“People won’t feel cheated anymore,” he told bdnews24.com. “They will believe that anyone manipulating the market will be punished.”