Portfolio manager's alleged misconduct puts City Bank under regulator's lens

The stock market regulator has uncovered that a portfolio manager at one of the country's largest private commercial banks - City Bank -- misappropriated shares and profited at the expense of his own institution.

After detecting unusual transactions in his account between 2023 and 2025, the Bangladesh Securities and Exchange Commission (BSEC) formed an inquiry committee in June this year.

Documents later provided by the bank showed that not only the portfolio manager but also the head of treasury of City Bank, along with three deputy managing directors, had benefited from the illegal share trades.

The bank, however, told The FE that the head of treasury and the deputy managing directors had no knowledge of the illicit transactions, that they had only entrusted the bank's portfolio manager with their funds for investments.

The FE correspondent has received copies of the letters that the market watchdog sent to City Bank, seeking relevant information and then observations on its probe findings.

Earlier this year, the BSEC found that Md. Sanowar Khan, vice president of corporate strategic business management at City Bank, had purchased 1 million units of the Capitec Grameen Bank Growth Fund in his personal BO account from the City Bank's BO account at Tk 13.8 per unit, when the market price was Tk 15.6.

Mr Khan later sold the same shares at market price, pocketing a profit of Tk 1.8 million while causing a loss to his company.He repeated similar transactions through another personal account and also used his wife's BO account to secure additional profits.

Both MrKhan and his wife benefited from trading in the stocks of ADN Telecom, Taufika Foods and Lovello Ice-cream, and BD Paints, using the same strategy.

Following the early detection of these activities, the BSEC launched a formal inquiry against MrKhan on June 3 this year. On July 9, the committee requested documents from the head of treasury of City Bank, including the bank's investment policy and details of measures taken when transactions violated internal rules.

Upon completing its investigation, the BSEC concluded that the head of treasury along with two deputy managing directors had also benefited from the irregular trades. Based on this evidence, the inquiry committee sought remarks from the bank last month on the probe findings.

Senior bank officials, however, told The FE that portfolio manager Sanowar Khan was solely responsible, insisting that the treasury head and deputy managing directors were unaware of the transactions. They added that actions had already been taken against MrKhan.

Remarks of City Bank MD & CEO Mashrur Arefin

"It is regrettable that one of our staff members has been allegedly involved in share market investment related wrongdoing or conflict-of-interest related ethical practices violation for just personal gain.

"City Bank is a large institution of 8,000 people. While I cannot take responsibility for every individual's ethical conduct, I feel happy that SEC's letter to our Chairman did not implicate the bank itself, but only referred to individuals. One thing to specially note is that SEC has asked for our comment based on their observation, which means, nothing has been established as yet. Had it been established, they would have asked for our explanation.

"The person in question was already withdrawn from his department and attached to HRD a few weeks ago. I am now awaiting the conclusion of investigations, both internally at City Bank and externally by the SEC.

"Personally, I have also taken this incident as a big learning experience."

farhan.fardaus@gmail.com