Investor Hiru fined Tk2cr for market manipulation

The Bangladesh Securities and Exchange Commission (BSEC) has fined Md Abul Khayer Hiru – an influential and controversial investor whom many investors would call "the Hero" – more than Tk2 crore for manipulating the share prices, according to sources at the stock regulator.

The BSEC fined Hiru at a recent meeting for manipulating the share prices of Asia Insurance, Bangladesh National Insurance, and Green Delta Insurance, confirmed the sources, while none of the stock market regulator agreed to comment on the matter.

As market manipulation allegations against Hiru ran rife, the BSEC initiated an inquiry which is now ongoing.

"Despite Hiru having a huge influence on the investors, the regulator stands firm against all fraudsters," one of the BSEC sources told The Business Standard.

In the eight months from June 2020 to January 2021, Asia Insurance's share price rose 658% to Tk129. From July 2020 to October 2021, Bangladesh National Insurance's shares jumped by 859% to Tk163. In the three months from April to June 2021, Green Delta Insurance's shares rose by 200% to Tk144.

After the shares reached the highest in the last two years, prices have fallen steadily.

Hiru made the headlines as the scamster responsible for the abrupt jump of insurance shares in 2020. Fingers were pointed at him for the abnormal rise in shares of several other companies.

Subsequently, the BSEC initiated the inquiry to see whether there was any "foul play" behind this price increase.

When contacted, Md Abul Khayer Hiru told TBS, "I heard I was fined. But, I have not received any letter from the regulator yet."

He said, "I have been trading in the market for a long time. Some mistakes could happen when it comes to making big investments in the market. If the law is breached, there is the regulator to take action accordingly."

A dramatic rise

Abul Khayer Hiru is a deputy registrar at the Department of Cooperatives. He joined the post after qualifying the 31st Bangladesh Civil Service (BCS) exam.

He was completely unknown in the stock market before 2020. In mid-2020, his name first came to the fore following the abnormal jump in the insurance share prices, especially shares of the general insurance companies. Hiru basically invested the funds of the Cooperative Department in the stock market, which reportedly earned him a lot.

Many investors joined him following the success, helping him earn a name in the market. It is said that he currently maintains more than Tk2,000 crore funds in the market.

Apart from the cooperatives fund, Hiru also traded shares in the name of his wife and relatives. His wife Kazi Sadia Hasan has become the managing director of a brokerage house called Monarch Holdings. Star cricketer Shakib Al Hasan is the chairman of the brokerage.

Hiru also has good ties with Shakib. Besides, Hiru is involved with Bangladesh Premier League (BPL) cricket team Fortune Barishal. He has also participated in various road shows organised by BSEC abroad.

A magic wand

To understand Hiru's investment influence in a stock, it becomes clear by looking at the price of that stock.

The share price of Sonali Paper, a company from the Over-the-Counter (OTC), was at Tk197.40 on 27 June last year. Over the next six months, the share price rose 386% to Tk975.

At the same time, shares of Genex Infosys rose 226% to Tk176, E-Generation rose 353% to Tk63 and NRBC Bank rose 255% to Tk39.

Similarly, the price of Delta Life Insurance shares was manipulated and increased by 262%. In addition, share prices of Fortune Shoes, Hamid Fabrics, Safko Spinning, Malek Spinning and National Feed soared at an unusual rate.

The share rises of all the companies mark the investment by Hiru and his people. When the prices picked up, they sold the high-priced shares. The share prices too started falling gradually with their departure.

This puzzle leaves many investors spellbound as their losses mount up.