BSEC initiates actions against illegal tipsters

The Bangladesh Securities and Exchange Commission (BSEC) initiated actions against illegal tipsters in the local stock market who sell unauthorised advice to unsophisticated retail investors.

The BSEC surveillance officials have identified a number of such activities online and have initiated further investigation.

On Wednesday, the BSEC wrote to bKash, the largest mobile financial service (MFS) provider, requesting details of one of its customers who has been using the MFS account to illegally collect monthly subscriptions and other fees from the mass people for membership in a telegram group that claims to ensure profits through its stocks' trading instructions.

The regulator also sought the MFS account's January-April transaction details for investigation.

BSEC Executive Director and Spokesperson Rezaul Karim told The Business Standard that it is illegal to sell securities buy-sell advice without a regulatory licence and in the market, there are a number of people and groups who do it, while most are fraudulent.

The BSEC is getting the details of such wrongdoers to punish them.   

It seems the regulator is going to begin a new wave of crackdown against tipsters with the use of the cell phone number 01811762369.

The market flooded with illegal, fraudulent advices

Historically, people tend to be more active in the stock market during bull runs, and due to the lack of mass level financial literacy, the majority of retail investors in Bangladesh depend on others to make their investment or trading decisions, whom they believe to have an understanding of the market or access to the edge of secret information.

That fuels the herding behaviour across the market and a number of frauds, including many who themselves lack the needed investment knowledge and prudence, try to cash in on it either through selling their illegal tips or campaigning to increase demand for particular stocks at their market tops.

In the bull market, when the majority of scrips advance and a few decline some people earn money following the tipsters. But, in a volatile or adverse situation, tipsters' advice ruins most investment accounts and since the tipsters have no official fiduciary responsibility, they remain untouched.

However, besides the fake market experts who pretend to know the obvious future, the market also has got several hundred educated and skilled investment professionals with expertise in fundamental analysis or technical analysis and most importantly a good understanding of risk factors in the market.

But they never appear in public domains with any buy-sell recommendation as the BSEC is yet to provide any financial advisory licence to qualified professionals.

BSEC Chairman Professor Shibli Rubayat-Ul-Islam earlier told this reporter that the country's investment industry has improved a lot with the onboarding of several hundred qualified professionals and his commission is working on strengthening their public voices through awarding them needed licenses to advice the public.

Earlier, the regulator several times took action against individuals and social media pages that spread stock market rumours.

However, distinguishing between spreading rumours, and illegal tips selling online and staying together with like-minded people with bona fide intention of sharing perspectives, analyses, and outlooks has long been a demand of investors who use social media platforms.

There are several social media forums that strictly prohibit sharing any illegal insider information or buy-sell tips to the public and are helpful to enrich members with investment knowledge and prudence.