Beximco Securities' licence not renewed over breach of securities laws

The market regulator has withheld the licence renewal of Beximco Securities, a stock brokerage owned by Salman Fazlur Rahman, a powerful ally of the previous regime.

Bangladesh Securities and Exchange Commission (BSEC) spokesperson Md. Abul Kalam confirmed the decision to The FE.

The BSEC had warned Beximco Securities several times against violations of securities rules and laws, according to a letter issued by the regulator.

He said, "The securities commission has decided not to renew the licence of Beximco Securities as it failed to conform to the securities laws."

The company's registration expired earlier this year.

When Beximco Securities Limited (TREC-178), a member of the Dhaka Stock Exchange (DSE), sought a licence renewal, the regulator denied the request.

According to sources, two separate letters regarding the matter have recently been sent to the Dhaka Stock Exchange.

Salman F. Rahman faces allegations of market irregularities, corruption, fraud, and embezzlement. Based on its findings, the BSEC permanently banned him in June this yearfrom all activities in the secondary market.

Subsequently, the market watchdog stated that as long as a permanently banned individual remains on the board of the brokerage firm, it will not renew its licence as a stock-broker and stock-dealer.

Trading at the firm has therefore been halted.

After the political shift on August 5 last year, Mr Rahman was arrested. He is currently in jail as he is being tried for murder charges.

Despite this, the company submitted a renewal application, with his signature collected through a lawyer, which the BSEC deemed illegal and subsequently rejected.

In a letter, the regulator cited non-compliance with the Securities and Exchange Commission (Stock-Dealer, Stock-Broker & Authorized Representative) Rules, 2000, as grounds for refusing renewal.

The rules require licence renewal applications to be submitted at least 30 days before expiry. Delayed submissions incur a daily penalty of Tk 2,000.

Beximco Securities submitted its application 94 days after the deadline, leading to a fine of Tk 188,000.

Company records show that its board consists of two corporate directors - Beximco Holdings and SS Exports. Salman F. Rahman represents Beximco Holdings, while Osman Kaiser Chowdhury represents SS Exports. Due to Salman's imprisonment, the company claims it is unable to hold board meetings, and therefore Mr Rahman has continued to remain on the board.

Experts say Beximco Securities could legally continue operations if Mr Rahman had been removed from the board. However, the company has been slow to act. The trading suspension will affect the market.

Attempts to contact Beximco Securities CEO Mostafa Zamanul Bahar were unsuccessful, as his mobile phone remained switched off.

farhan.fardaus@gmail.com