At its heart, the capital market is fuelled by trust, not just data. Index fluctuations are far more than cold mathematical shifts; they are a pulse check on the collective faith of millions.
Lately, however, a troubling debate has surfaced regarding the regulator’s penchant for heavy fines. One must ask whether the regulatory rigour is actually shielding the average investor or simply compounding their misfortune.
The question may appear straightforward, but it masks a systemic crisis. As the system stands, when a firm or individual is slapped with a massive fine, that capital flows directly into the state treasury. This leaves a glaring vacuum.
What becomes of the retail investors whose savings were eroded by the initial malpractice? The bitter reality is that while the offender pays the state, the victim remains empty-handed.
To make matters worse, the moment a fine is announced, share prices often crater. Investors are thus dealt a “double blow”, first by the manipulation itself, and then by the very punishment intended to “protect” them.
This creates sharp friction between regulatory theory and ground-level reality. If disciplinary actions end up crippling the people they are meant to serve, we must interrogate the purpose of the exercise.
True justice in the capital market should not be measured by the volume of fines collected, but by the degree to which victims are made whole. Punishment only holds moral weight when it offers restitution to the aggrieved.
Should the fine system be scrapped entirely? Of course not. But the framework requires a radical overhaul. A legal mechanism is needed to redirect a significant portion of these penalties back to affected investors as direct compensation.
Only then can a level of market trust, which has quite frankly hit rock bottom, begin to be repaired.
Furthermore, for those who harvest “abnormal” profits through manipulation, a cheque written to the government is a hollow deterrent. Mandatory dividend payouts at elevated rates for the companies involved should instead be considered.
This would ensure that ill-gotten gains are funnelled back to the rightful shareholders, a tangible rather than symbolic form of financial justice.
Ultimately, prevention is more vital than the post-mortem. By fortifying the “three pillars” of robust digital surveillance, radical transparency, and expedited investigations, the window for irregularities can be closed before it opens.
Stopping a fire is always better for stability than attempting to make an example out of the ashes.
The regulatory body must decide whether it views itself as a “punisher” or a “guardian”. Real guardianship prioritises the investor over headline-grabbing statistics. If the penalties do not reach the people who suffered, they are not acts of justice.
They are merely hollow data points. The question that must be faced is whether good governance is actually being built or whether boxes are simply being checked to pad the treasury. The future of the market depends on an honest answer.
The author is a Vice President at the Bangladesh-American Chamber of Commerce USA Inc. The views expressed in this article are solely those of the author.
