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Bangladesh Focuses on Ethical Culture to Combat Insider Trading

  //business-finance.news-articles.net/content/202 .. n-ethical-culture-to-combat-insider-trading.html
  Published in Business and Finance on Thursday, January 8th 2026 at 8:57 GMT by The Daily Star
      Locale: Dhaka Division, BANGLADESH

Dhaka, Bangladesh - January 8th, 2026 - For years, regulators have focused on stricter laws and increased surveillance to combat insider trading, a practice that erodes investor trust and distorts financial markets. However, a growing consensus among capital market analysts and corporate governance experts suggests that a more fundamental shift - a focus on building robust, ethical corporate cultures - is crucial to effectively deterring this illegal activity.

Insider trading, the act of trading securities based on non-public, material information, remains a persistent threat globally, including within Bangladesh. The Bangladesh Securities and Exchange Commission (BSEC) has long recognized its severity, with penalties including substantial fines and imprisonment for those convicted. While the BSEC continues to strengthen regulations and enforcement mechanisms, experts argue that these measures alone are insufficient. A truly effective defense, they say, lies in fostering a company culture where ethical conduct isn't just a compliance requirement, but a deeply ingrained value.

"A positive corporate culture is the first line of defense," explains Arifur Rahman, a leading capital market analyst. "When employees genuinely believe in the integrity of their organization, they are far less likely to entertain the idea of compromising ethical standards, even when presented with the opportunity for personal gain through insider trading." This isn't simply about avoiding legal repercussions; it's about fostering a sense of collective responsibility and commitment to fair market practices.

But what does a culture that actively discourages insider trading look like? Experts emphasize several key components. Robust internal controls are paramount, ensuring that access to sensitive information is carefully managed and monitored. Equally important are comprehensive compliance programs that clearly outline acceptable conduct and the consequences of violations. However, these systems are only effective when coupled with ethical leadership.

"Leadership sets the tone," notes Moniruzzaman, a corporate governance expert. "If leaders prioritize short-term profits over ethical considerations, it sends a clear signal to employees that cutting corners is acceptable. Conversely, when leaders consistently demonstrate integrity and transparency, it creates a culture where employees feel empowered to do the right thing."

Beyond establishing clear rules and demonstrating ethical leadership, companies must invest in employee education. Regular training and awareness programs can effectively illuminate the risks associated with insider trading, not just in terms of legal penalties, but also the reputational damage it inflicts on both the individual and the organization. These programs should move beyond simple "do not" directives and delve into the ethical considerations, helping employees understand why insider trading is wrong.

A crucial, and often overlooked, element is the implementation of robust whistleblowing mechanisms. These systems must guarantee employees can report suspected wrongdoing without fear of retaliation. An environment of openness and transparency, where employees feel safe to raise concerns, is vital for early detection and prevention. "A culture of openness encourages employees to come forward with information about potential insider trading, enabling companies to take timely action," Moniruzzaman explains. Simply having a whistleblowing hotline isn't enough; companies must actively demonstrate that reports are taken seriously and investigated thoroughly.

The BSEC, while continuing its regulatory role, acknowledges the growing importance of cultural change. A BSEC official stated, "We are committed to creating a level playing field for all investors, and we are actively monitoring the market. However, we recognize that regulation alone cannot solve the problem. We are encouraged by the increasing focus on corporate governance and ethical conduct within listed companies." The Commission is exploring potential incentives to reward companies that demonstrate a strong commitment to ethical practices and robust internal controls.

Ultimately, combating insider trading requires a multi-faceted approach. While regulation and enforcement remain essential, a genuine and sustained commitment to building ethical corporate cultures represents a powerful, proactive strategy. By prioritizing integrity, transparency, and accountability, companies can not only reduce the risk of insider trading but also foster a more sustainable and trustworthy financial market for all.