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

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