SEC sets lock-in to discipline market by Sarwar A Chowdhury

The stock market regulator has introduced a lock-in period barring
sales of new convertible shares or shares against warrants issued by
a listed company. From now, there will be a three-year lock-in for
directors or those who hold 5 percent or more shares. It means
shareholders and investment companies will not be able to sell the
shares they possess in a listed company within three years from the
issuance of securities. For others, Securities and Exchange
Commission (SEC) has set one year as the lock-in time. "The lock-in
shall also be applicable in case of issuance of equity security
against loan or debt security having no predetermined conversion
feature if such equity security is not issued at a price equal to
last six months' weighted average market price at the stock
exchange(s)," the SEC said. The market watchdog imposed such
conditions in a gazette notification that came into effect from
Sunday. In the notification, the SEC said the commission introduced
the lock-in system to protect the "interest of investors, capital
and securities markets". The lock-in will also be applicable for
companies that have already received nod from the commission for
issuing new shares or convertible securities, and equity shares
against loan or debt security. The SEC introduced the lock-in
following media reports on a DSE investigation that a foreign
investment firm had entered into a share subscription deal with a
locally listed company, Bangladesh Thai Aluminium ( BD Thai), without
any lock-in. Lock-in is a measure by which investment companies are
barred from selling before a certain time the shares they possess.
But, taking the opportunity of absence of the lock-in, the foreign
firm, GEM Global Yield Fund, bought a huge chunk of shares against
warrants and dumped almost all the shares within one and a half
months of acquisition. The foreign firm thus repatriated $2 million
from Bangladesh capital market, according to the DSE probe report,
which was submitted to the SEC for necessary actions. Earlier the
lock-in system had been in place for all companies -- both foreign
and local -- to avert short-term speculative trading, and flight of
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