Police arrest Facebook share tipster

Agence France-Presse . Dhaka

A Dhaka-based Face-book stocks tipster with more than 10,000 followers has been arrested on charges of illegally manipulating Bangladesh’s overheated stock exchange, the police said Thursday.
Mahbub Sarwar, 26, a prolific blogger who provided online stock tips through the popular social networking site, will be charged with market manipulation, police spokesman Mohammad Sohel told the news agency.
‘His Facebook account has around 3,000 members and he has a number of blogs. We believe around 10,000 or more people have been acting on his tips for the last few months,’ Sohel said.
‘His tips could trick thousands of people into buying certain shares on certain days,’ he said, adding that Sarwar would also be charged with providing market advice without a licence.
The self-styled stocks guru faces at least five years in jail as ‘his illegal tips have proved to have impact on the market and influenced trading,’ Securities and Exchange Commission spokesman Farhad Ahmed said.
The arrest was part of a crackdown on illegal online share advice.
‘We’ll arrest anyone found to have influenced trading illegally,’ Ahmed said, adding the SEC had been investigating Sarwar for months.
On his blog, Sarwar promised potential clients profits more than double the average on the Dhaka Stock Exchange — which is on a bull run and up some 30 per cent over the last two months.
Membership of his Facebook group costs up to 70 dollars a month and 350 dollars a year and he charged extra for individual tips.
He was also accused of running an unauthorised portfolio management services company — advising clients on which investments to make — for which he charged 20 per cent of profits.
‘We have never seen anything on this scale before, we have no idea how much money he has made,’ SEC executive director ABM Tariquzzaman, who led the investigation, said.
Bangladesh’s bourse, one of Asia’s smallest, is vulnerable to manipulation and regulators have struggled to stop a slew of online scams, publicly warning investors in January of a rogue Facebook group providing bogus tips.
Although nearly 40 per cent of Bangladeshis live on less than a dollar a day, Dhaka’s share market has been one of the best performers in the world with the main index doubling since the middle of last year.
Experts have described the exchange as a ‘ticking bomb’ as repeated attempts to cool the market’s bull run this year failed. Tens of thousands of retail investors have poured in fresh funds every day.