Public Enforcement of Securities Laws Violations in Bangladesh: A Case Study of Listed Non-Financial Companies

Pallab Kumar Biswas, Halima Akter

Abstract


For an orderly capital market, the Bangladesh Securities and Exchange
Commission (BSEC) has issued a number of rules, regulations, ordinance,
directives, and notifications. The Dhaka Stock Exchange (DSE) also monitors the
regulatory affairs of the listed companies following its listing regulations. How far
these authorities are carrying out their enforcement duties remains an empirical
question. Therefore, this paper reviews and analyses the public enforcement actions
(PEAs) of securities laws violations by the BSEC and the DSE and provides
summary information about the types of violations made, and the sanctions required
by the regulatory bodies over a 19-year period from 1995 to 2013. Using publicly
available data, a list of 830 PEAs is prepared and evaluated. Descriptive statistics
show with the exception of 1998, security law violations leading to PEAs take place
in all the years from 1995 to 2003 and it was maximum (175) in 2006. Among the
different types of security law violations, annual accounts related irregularity tops
the list and is followed by interim report related irregularities and AGM (annual
general meeting) related irregularities. Focusing on the regulators, the DSE is
found only to impose penalties while the BSEC used both warning letters and
financial penalty when dealing with the wrongdoers. Irrespective of these
enforcement actions, Bangladesh capital market could not avoid the stock market
crash during 2010-2011, suggesting that a more efficient and impartial
implementation of securities regulation is needed to avoid such situation in future.


Keywords


Enforcement, Penalty, Directive, Warning, BSEC.

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ISSN-1682-2498