Dhaka: The White Paper on the state of Bangladesh's economy has revealed that trillions of takas were embezzled from the stock market through fraudulent activities, manipulation, and deceit, particularly in the processes related to placement shares and initial public offerings (IPOs). The committee, led by eminent economist and Distinguished Fellow of the Centre for Policy Dialogue (CPD) Dr. Debapriya Bhattacharya, presented these findings at a press conference held at the NEC conference room in the capital. According to Bangladesh Sangbad Sangstha, the report highlighted that excessive government oversight hindered the development of the market and prevented responsible institutions from fulfilling their mandates. This situation, coupled with strong vested interests, resulted in a persistent atmosphere of gambling and swindling within the market. The report also noted that laws, rules, and regulations were deliberately inadequate in their implementation, allowing weak and substandard companies to enter the market through IPOs. A significant manipulation network involving influential entrepreneurs, issue managers, auditors, and certain investors has been identified. In many instances, officials from the regulatory body were found to be complicit, exploiting legal loopholes or granting concessions. The growth of the equity market is hampered by poor market infrastructure and an unwieldy processing cycle for IPOs, contributing to a market environment that is not conducive to efficient functioning. The report further explained that IPO valuations favor sponsors over general investors in the secondary market. Settlement delays increase interest rate and price fluctuation risks for investors, while liquidity is negatively impacted by the lengthy IPO cycle. The absence of central counterparty clearing, interoperable information technology infrastructure, and adequate trading platforms hinders brokers and clearing houses from engaging in transparent market making and trading. Additionally, the increase in the index led to regulations raising margin loan ratios, which fueled the stock market surge. The Bangladesh Securities and Exchange Commission (BSEC) often maintained the index without considering rising stock prices, with regulatory actions occurring only when prices began to fall. The controversial floor price system damaged the market's international reputation, stopping trading in strong companies and encouraging market manipulation due to low fines compared to potential profits.
