The High Court on Tuesday summarily rejected the petitions of the five brokerage houses and merchant banks against the Securities and Exchange Commission’s decision to suspend their activities for a month for allegedly manipulating the capital market.
The bench of Justice AHM Shamsuddin Chowdhury and Justice Sheikh Md Zakir Hossain also hoped that the government would immediately form a ‘high-power committee’ to investigate and to identify the ‘godfathers’ and ‘real culprits’ behind last week’s plunge of the Dhaka Stock Exchange’s general index.
The court also observed that it should not intervene in the SEC’s ongoing probe to find out those individuals and organizations who were involved in market manipulation.
It considered the irrational fall of share prices a national crisis and expressed the need for proper investigation into the repeated falls in the stock market which is a ‘the crying need of the day’.
After the order, attorney-general Mahbubey Alam told reporters, ‘The investors, who opened beneficiary accounts in the suspended brokerage houses, can trade through the other brokerage houses by using their trade code.’
The five companies — Al-Arafah Islami Bank Ltd, Dhaka Bank Ltd, PFI Securities Ltd, Alliance Securities and Management Ltd and IIDFC Securities Ltd — on Monday filed separate writ petitions challenging the decision that the SEC took on January 20. They also sought a stay on the operation of the decision.
The SEC suspended the operation of six companies, including the NCC Bank, after hearing allegations that they had aggressively passed sale orders on January 20 when the general index of the Dhaka Stock Exchange plunged by 600 points in just five minutes of trading.
Rokanuddin Mahmud, the counsel for Al-Arafah Islami Bank Ltd, told the court that the SEC, in connivance with other big sharks, had taken away a huge amount of money from the market in which the brokerage houses were not involved.
‘Brokerage house were bound to execute their clients’ orders to sell their shares,’ he added, and sought withdrawal of the SEC’s decision for the ‘greater interest of small investors’.
M Zahir, who moved the other petition, argued that the SEC had suspended the activities of the four other brokerage house without citing any specific reason.
He also argued that according to the law the SEC could not suspend any licence or the registrar of any brokerage house without a proper hearing.
The attorney-general argued that the writ petitions were not maintainable as the suspension order is still pending since the brokerage houses have been called by the SEC to defend themselves.
During the hearing, attorney-general Mahbubey Alam told the court that the committee to investigate the manipulators, who siphoned off over Tk 600 crore from the capital market, is in the process of formation. He also said that the SEC had already issued notices to the brokerage houses to tell their side of the story.
Mahbubey Alam said the court should not interfere as the process to form an investigation committee was underway.
‘The present market situation, including the allegation against the brokerage houses, is being investigated by the SEC and the petitioners are free to come to the court if they become aggrieved by SEC’s final decision,’ he told reporters.
