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The securities regulator has revoked the TREC licence of Shah Mohammad Sagir & Co over the embezzlement of clients' funds worth around Tk 137 million six years ago.
Trading at the brokerage firm was suspended in September 2019 to protect investors after the regulator confirmed misappropriation of investors' money in the wake of an investigation by the Dhaka bourse.
Md Abul Kalam, spokesperson of the Bangladesh Securities and Exchange Commission (BSEC), confirmed the cancellation of the licence to the FE. The securities regulator will also take legal actions against those involved in the embezzlement of the funds, he added.
The brokerage firm defrauded its clients by using duplicate back-office software and providing fake information on their investment status. The victims of the fraud have not received any refund although six years have passed.
Three weeks back, the regulator also cancelled the TREC licence of Tristar Securities only 44 months after it had been issued, owing to the firm's failure to maintain the minimum required capital.
Meanwhile, many investors lost money in the last few years due to the closure of at least five brokerage houses, including Mohammad Sagir & Co. The firms siphoned off funds by selling off investors' shares and by not carrying out buy orders even after receiving cash.
Embezzlement and mismanagement of clients' funds by brokers have remained long-standing unresolved problems. Major scams so far involved Crest Securities, Dawn Securities, Tamha Securities, Banco Securities, Shah Mohammad Sagir & Company and Moshihor Securities and entailed more than Tk 3.0 billion.
The scam by Moshihor Securities is the latest that got exposed in August last year after the new BSEC Commission led by Khondoker Rashed Maqsood took charge. Currently, share trading in these firms is suspended.
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