Bangladesh’s capital market regulator, the Bangladesh Securities and Exchange Commission (BSEC), has launched an investigation into allegations of insider trading and stock-market manipulation against the former chairman of the Insurance Development and Regulatory Authority (IDRA), M. Mosharraf Hossain.

The purpose of the investigation is to determine whether confidential regulatory information related to Delta Life Insurance, Padma Islami Life Insurance, Provati Insurance Company, Asia Insurance, and Eastern Insurance was used for stock-market trading during Mosharraf’s tenure at IDRA. Investigators are also examining whether privileged information was used to conduct trades through provident funds or other institutional funds controlled by his wife.

According to regulatory sources, in September BSEC appointed Deputy Director Maodud Momen, Assistant Director Md. Mehedi Hasan Rony, and Assistant Director Navid Hasan Khan to conduct the investigation, and their report is due within the next two weeks. The regulator is also looking into allegations that Mosharraf and his wife Jannatul Mawa invested Tk 33 crore from provident funds owned by their private companies into the stock market for personal business purposes.

It has been learned that during his tenure at IDRA, Mosharraf established two companies—Loves & Live Organic Ltd. and Gulshan Valley Agro Industries. He served as managing director of both, while his wife was appointed as a director. Four separate funds were created under these companies, and four beneficiary owner (BO) accounts were opened for trading.

After joining IDRA, Mosharraf became chairman of the trustee board for these four funds, and Tk 32.91 crore from the provident fund was channeled into shares of the five listed companies mentioned above. Officials have questioned the source of the funds deposited into the provident accounts of these largely paper-based companies, given that provident funds are not permitted to invest more than 25% of their total assets.

When asked about the investments, Mosharraf told the media, “Tk 33 crore is a large amount; not even half of it was invested.” He claimed that at the time there were many IPOs in the market and that the same money was repeatedly shown as revolving funds in multiple applications. He added that the investments were made before he joined IDRA, during a period when efforts were underway to increase stock-market investments.

He said, “After taking on the role of IDRA chairman, I became extremely busy. My representative may have mistakenly purchased shares of Delta Life Insurance.” However, he declined to comment on shares of the other four companies. He stated that he has already provided information to several investigative agencies regarding the matter.

Asked about the investigation, BSEC spokesperson and director Abul Kalam told the media, “The commission decided to conduct this investigation to increase transparency in the capital market. If the allegations are proven, the commission will take action according to the law.”

Earlier, on November 18, the Anti-Corruption Commission (ACC) filed two cases against Mosharraf and his wife for allegedly amassing Tk 14.5 crore in illegal wealth.

Mosharraf, a chartered accountant with more than two decades of experience in the insurance and investment sectors, joined IDRA as a member in 2018 and was promoted to chairman in 2020. He resigned in June 2022 after the ACC requested statements of assets from him and his family members.

Prior to this, the Bangladesh Financial Intelligence Unit (BFIU) informed the ACC that in recent years, approximately Tk 42 crore had been deposited into the bank accounts of Mosharraf, his family members, and related companies.