A common scenario in the domestic stock market is low performing stocks becoming the top gainers no matter how the market indices react.

For example, shares of certain companies that have been incurring losses for more than a decade and struggle to give their investors even a penny soared two-fold or more in the last three months even amid the bearish market.

Interestingly, the issuers repeatedly insisted that there was no reason behind their abnormal price hike but still, their stocks continued to skyrocket.

However, share values normally fall after the honeymoon period of price manipulation comes to an end and general investors become the ultimate victim, according to market analysts.

Still though, general investors rush behind manipulators in search of overnight profits, they said, adding that this tendency helps manipulators offload their overvalued stocks to general investors.

With this perspective, market analysts are questioning the effectiveness of the high-cost surveillance software used by the Bangladesh Securities and Exchange Commission (BSEC).

The manipulation of several stocks has been ongoing for long but what has the software done to stop it and were the measures effective or is the market not being monitored properly?

The software was brought on among much hue and cry that it would be effective in stopping stock manipulation in its early stage but such actions were never seen, said Faruq Ahmad Siddiqi, former chairman of the BSEC.

In many cases, stocks of small companies and junk stocks rose manifold due to manipulation but no steps were taken in the early stage, he told The Daily Star.

Inquiry committees were even formed at times but their findings were not made public in many cases.

And even when the BSEC imposed fines on some manipulators, it turned out to be a slap on the wrist considering their offence, he added.

For example, the stock market regulator recently fined Abul Khayer Hiru and his associates Tk 5.25 crore for their realised and unrealised gains of more than Tk 68 crore from manipulating stocks of NRB Commercial Bank and Fortune shoes, according to the BSEC's enforcement decision.

"When an offender does not face adequate consequences, they feel more encouraged to engage in manipulation," the former BSEC chairman said, adding that the regulator should seek the option of levying criminal charges on them.

The US Securities and Exchange Commission announced last June that it found some sixteen people participating in a stock manipulation scheme that generated more than $35 million in illicit profits. So, it decided to fine them more than $75 million collectively, according to its website.

In addition, major manipulators can be banned from trading altogether, which is a common practice across the world, Siddiqi said.

"The manipulation should be stopped by any means necessary," he added.

A senior official of an asset management company said the image of Bangladesh's stock market is already mingled with the word manipulation, which is not a good sign for the market in the long-run.

"Technology cannot give a biased opinion on the manipulators as only the people behind the technology can take such steps," he said.

"So, the regulator's activities in reigning in manipulation raises questions of whether it is doing the job only after seeing a dent in investors' funds," he added.

The BSEC can only provide the right answer to this question through its own work. Otherwise, the same confidence crisis will continue and the market's image will only get worse at home and abroad.

"And this cannot be fixed by arranging road shows," the official said.

On condition of anonymity, a former commissioner of the BSEC said the organisation is constantly trying to raise the market index by any means necessary, including patronising manipulators.

The regulator recently termed a known manipulator who was fined by the commission as a big investor.

"This is a harsh cruelty of the regulator."

Although manipulators can raise the index temporarily, their activities would pickpocket general investors and erode confidence in the market, hampering it in the long-run.

"So, the BSEC should leave this mindset of raising the index with the help of manipulators," he added.

In response to all these concerns, BSEC Spokesperson Mohammad Rezaul Karim said that when an investor buys shares in bulk, they cannot immediately say if it was an attempt at manipulation.

"So, we have to wait and see whether there is any malpractice or breaching of securities rules," he added.

Karim went on to say that to detect serial trading and insider trading, the BSEC needs to wait days and even months as expediting the process could put honest investors at blame for the offence as well.

Serial trading is the buying and selling of shares between the same beneficiary accounts in order to impact the share price.

Insider trading is the buying and selling of securities by people who have access to non-public information that may influence the stock value.

In answer to a query, Karim said hundreds of alerts come in every day from the surveillance software but if the surveillance team were to scrutinise each one, then it would a lot more manpower.

Even if the BSEC finds reasonable evidence of malpractice in trading, it has to form an enquiry committee that needs at least 15 days to complete a comprehensive investigation.

After the enquiry team submits its findings, more procedures remain as the documents need to be verified and hearings need to be held.

Regarding the issue of imposing light punishments, Karim said the commission imposes penalties based on the offence and declined to comment further.

The BSEC had launched Trapets InstantWatch, an automatic market transaction surveillance and compliance system widely used in Europe, to build its own surveillance network at the end of 2012.

The development and installation of the software was under a project co-funded by the government and the Asian Development Bank (ADB).

The installation and implementation of the surveillance software within the BSEC was also a condition of the ADB for releasing $30 crore as assistance under the second phase of its capital market development programme.