LR Global CEO banned for life, must recover investment in 30 days

The stock market regulator has ordered LR Global Bangladesh Asset Management Company to recover the investment it made in Padma Printers & Colour three years ago in breach of securities rules.

The Bangladesh Securities and Exchange Commission (BSEC) at the same time has imposed fines on six top officials of the asset management company, including CEO Reaz Islam, for making the unlawful investment. Mr Islam is also facing a lifetime ban from activities in the capital market.

The BSEC made the decision at a meeting at its head office in the capital on Tuesday, presided over by its chief, Khondoker Rashed Maqsood.

In a press release, the BSEC said the asset manager had invested Tk 686.4 million by purchasing a 51 per cent stake in Padma Printers & Colour in 2022 when it was a loss-making business and listed in the over-the-counter market.

For the equity investment, cash extracted from six mutual funds-DBH First Mutual Fund, Green Delta Mutual Fund, AIBL 1st Islamic Mutual Fund, LR Global Bangladesh Mutual Fund One, NCCBL MF-1, and MBL First Mutual Fund-under the management of the fund manager was used, which was a clear violation of securities rules.

Later, the asset manager restructured the board of Padma Printers and changed the company's name to Quest BDC Ltd. It also increased Padma Printers' paid-up capital to Tk 500 million from just Tk 16 million by issuing shares through private placement but did not publish price-sensitive information on that and did not conduct an extraordinary general meeting.

Apart from the CEO, Rezaur Rahman Shoag, Brig Gen Sharif Ahsan, Madina Ali, Syed Kamrul Huda and Md. Omar Soeb Chowdhury have been fined Tk 10 million each for the collective misconduct. All of them were involved in managing the mutual funds from which the money was used to purchase the Padma Printers' shares.

The regulator also said that if the investment worth Tk 900 million, including interest, is not retrieved within 30 working days, the CEO will face a penalty of Tk 980 million, while George M. Stock III, a director of LR Global, and Rezaur Rahman Sohag Monowar, another director, will be fined Tk 10 million each.

Trustee Bangladesh General Insurance Company will also be fined Tk 30 million.

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