Express (August 16, 2011)
The securities regulator will make available a draft to stakeholders within this month (August) in an effort to formulate specific rules and regulations on private placement of shares to help obliterate the illegal kerb market, officials said.
The move comes following concern expressed by the regulator over the illegal transactions of private placement shares in the kerb market.
"It is a matter of great concern to the Securities and Exchange Commission (SEC) as the existing securities laws permit nobody to build up an illegal market dealing in private placement shares," a top official of the SEC told the FE.
Mohammad Saifur Rahman, an executive director of the SEC, confirmed the information about the regulatory measure against the unlawful distribution of private placement shares.
An SEC top official said the regulator is working on the formulation of specific rules and regulations on private placement shares taking into account the recommendations of the probe committee, led by Khondkar Ibrahim Khaled, and other relevant matters.
The probe committee in its report on the recent stock market scam has said that many key persons have "become corrupt" through both allotment and transfer of such shares.
After submitting the report to finance minister on April 7 this year, Mr Khaled told the reporters at his office that the system of distribution of private placement shares has "polluted the society".
"Private placement of shares has become a very alarming issue in the country as a large number of people were made to get involved in the process of allotment of placement shares for the interest of the vested quarters," he said.
Khaled said even the government officials were given 'private placement shares' as bribe.
The SEC official said in future the regulator would be tough in implementing the laws relating to the private placement shares.
"The draft is under process. The regulator will make it available to the stakeholders by month end," the official said.
He said the regulatory move has been taken for the sake of small investors and to wipe out the illegal kerb market as well.
Asked about the recent activities of some placement share distributors who set up a separate kerb market beyond the main market, the SEC official said they are under the observation of the securities regulator.
"The regulator has already filed cases against some placement distributors and is presently observing their activities very closely," he said.
He admitted that it was partly true that the stock market had recently faced liquidity crisis as a large amount of money was stuck in placement shares of some companies.
"That's why the SEC is trying to bring these companies to the capital market after proper scrutiny," the official added.
Meanwhile, sources said a kerb market of placement shares was set up at the office of a business group in the city's Banoshri area, where placement shares of about Tk 10 billion were sold over a period of one year.
Country's prominent figures including members of parliament (MPs), top government officials, top executives of different brokerage firms and even cultural personalities, made investment in placement shares.
DSE president Md Shakil Rizvi welcomed the regulatory move in formulating specific rules and regulations on private placement shares.
"A separate kerb market is a threat to the existence of the main market. That's why it's very urgent to finalise specific rules and regulations of placement shares," Mr Rizvi told the FE.
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