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Stock crash could have been avoided

Chairman of Parliamentary (JS) Standing Committee on the Ministry of Finance said the stock market crash of December-January would not have occurred had the authorities concerned implemented its time-befitting recommendations.
AHM Mustafa Kamal, chairman of the committee, Friday said this at a press briefing titled "The Role of CMC Kamal in Capital Market and Protesting Some motivated Remarks by Vested Quarters Against the Company" held in the city."Before September last, we realised that the stock market was heading for a fall," Mr. Kamal told the press briefing.
He said that his committee advised the ministry of finance and the securities regulator on how to face the impending disaster, but nobody paid heed to their recommendations.
"The market crash could not have occurred if the authorities concerned had acted in accordance with our suggestions," Mr. Kamal said. Citing the performance record of his company CMC Kamal, and the probe committee's remarks, Mr. Kamal urged the government to bring the responsible quarters to book to avoid recurrence of disasters in the future. He said different quarters spread 'intentional remarks' against him as he is the chairman of the parliamentary standing committee on finance."Before publishing the probe body's report, some media outlets published reports along with my photograph bringing allegations against me, despite the fact that the probe body just suspected some reasons for overpricing of shares of my company," Mr. Kamal said.
He said everybody knows what is there in probe body's report about CMC Kamal.
The probe committee on the recent stock market crash said in its report that nine reasons were suspected for overpricing of the shares of CMC Kamal.
The reasons include the declaration of 10 per cent stock dividend in 2009 despite the company's negative earning per share (EPS), the declaration of tax after net profit amounting to Tk 7 million in the first quarter of 2010, denomination of shares' face value, the company's promotion from 'Z' to 'A' category in August, 2010, increased net asset value after asset re-evaluation and the proposal to expand paid-up capital from Tk 500 million to Tk 2 billion.
Mr Kamal said after his release from jail in 2008, CMC Kamal became profitable overcoming previous negative EPS in 2009 and then offered stock dividends. The company did not offer cash dividends as it needed cash money to pay pending loans.
He said his company made desired profits in the first quarter of 2010 after the replacement of Tk 17.3 million's worth machinery.
He also said the splitting of face value and the shifting of the company's category were carried out as per existing rules. He said the proposal of expanding paid-up capital from Tk 500 million to Tk 2 billion was inevitable for the sake of exceeding the previous capital base and it was a legal demand.
Coming to making a profit of Tk 31 million in September, 2010, Mr. Kamal said the period of 2009-10 was a golden period for the garment sector. That's why his company was able to reap such profits, he added. In reply to a query whether allegations could be brought against the probe committee, Mr Kamal said the committee was right and tried its best to do a good job within a short span of time. He also dismissed the allegation brought against him for selling out sponsors' shares in the bullish market."I and my family directors did not sell sponsors' shares. We only sold out bonus shares," Mr. Kamal said. At the same time, he brought allegation against Mahmudur Rahman, acting editor of daily Amar Desh, for motivated remarks against him."Mahmudur Rahman would sell out all sponsor-shares in the overpriced market if he were the director of such a company as that of mine," Mr. Kamal said.
Source: Financial express

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