Some institutional investors sold their 32 percent stake, or 3.23 crore shares, of Khan Brothers PP Woven Bag Industries Ltd in the second half of 2023, according to the market regulator.

However, a significant portion of the offloaded shares have been purchased by large individual investors looking to manipulate its price, said a top official of the Bangladesh Securities and Exchange Commission (BSEC).

Speaking on condition of anonymity, he informed that the investors fuelling the price rise also run a listed pharmaceutical company.

"So, it is clear they had ill motives for purchasing the shares since their business is unrelated," he said.

The large individual investors purchased the shares under the names of other people and traded the stocks among themselves in order to raise the price.

As such, shares of Khan Brothers soared nine-fold to more than Tk 230 per share although the company is listed in the B-category due to poor performance, the BSEC official added.

Shares of Khan Brothers provided no dividend for the financial year of 2022-23 after having doled out just 2 percent cash dividend the year prior.

The company's share price dropped 6 percent to Tk 211 per unit yesterday, showed data of the Dhaka Stock Exchange.

Another top official of the BSEC said they had already formed an investigation committee and identified the involvement of the top bosses of a listed drug-maker in violating securities rules to inflate share prices.

"So, the investigation committee recommend the commission punish the related persons," he added.

Sales of Khan Brothers rose to Tk 10 crore in financial year 2022-23, up from Tk 9 crore the previous year.

However, the company losses fell to Tk 63 lakh that year compared to Tk 1.80 crore in financial 2021-22, its financial report showed.

BSEC Spokesperson Mohammad Rezaul Karim said the regulator was well-informed of the abnormal share price hike and share transfers from institutional investors to large individual investors.

The BSEC is investigating the matter thoroughly and will deliver the according punishment if any breaches of the securities rules are found, he added.