BD Stocks Drop After Report Says Brokers Caused Slump.

The Dhaka Stock Exchange’s benchmark index fell for the first time in three days after a report said a government panel held 50 brokerages responsible for a decline in stock prices that prompted investors to riot.

The panel in its report submitted to the finance minister on March 7 named the brokerages and recommended action, Bdnews24.com, a Bangladeshi news website, said today. Shares plunged earlier this year prompting the exchange to close twice after investors protested and pelted stones at the bourse. The panel’s recommendations have not been officially released.

The Dhaka Stock Exchange General Index fell 4.5 percent to 6,262.69 at the 3:00 p.m. close. The gauge climbed 22 percent in March after losing 30.5 percent in February and 9.7 percent in January. The measure had rallied 83 percent in 2010 and 62 percent in 2009.

“Local funds sold stocks heavily on fears of punitive action by government agencies on brokerages and banks after the report was released by a news website,” said Muhammad Saifuddin, managing director at Dhaka-based IDLC Securities Ltd. “However, this is an overreaction and we expect stocks to rebound tomorrow.”

The panel also asked the central bank to punish commercial banks, which had violated norms to benefit from the stock decline, the news report said.

Bangladesh’s Securities & Exchange Commission “was responsible for the market crash as it did not do adequate due diligence,” Chairman of the Capital Market Investigation Committee Khondkar Ibrahim Khaled said in a phone interview on April 7. The SEC Chairman Ziaul Khondker didn’t answer two calls made to his mobile phone today and didn’t respond to a text message.