a year ago

BSEC, bourses ramp up vigilance, enforcement actions

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The securities regulator and the bourses have intensified their vigilance and enforcement actions against the errant market operators and listed companies to ensure the safety of investors' money and investments, officials said.

Their joint efforts have been accelerated against the backdrop of misappropriation of investors' money and shares by some stock brokers and the violation of the securities rules by many listed companies and their directors.

"The securities regulator and stock exchanges have increased monitoring to rein in the gross anomalies like misappropriation of investors' money," said Mohammad Rezaul Karim, the spokesperson of the securities regulator.

He said the Bangladesh Securities and Exchange Commission (BSEC) previously also conducted inspections and monitoring as part of its regular job.

"But the monitoring and enforcement actions have been intensified recently following investors' allegations regarding embezzlement of money and shares and our joint move will be continued for the sake of investors," Mr. Karim said.

As part of the intensified move, the securities regulator formed some probe bodies to look into the unlawful sales of shares by a sponsor-director of a private commercial bank, the alleged insider trading conducted by some individuals including Mamun Azim and the allegations lodged against some listed companies including Active Fine Chemicals.

The BSEC has asked the NRB Bank to take departmental action against its chief financial officer (CFO) Kamrul Hasan and others concerned as they executed unauthorised share transactions.

Apart from restructuring boards of different weak companies, the securities regulator has also sought information from some listed companies regarding the status of their investments along with fining some directors and auditors for unlawful activities.

The BSEC has also delivered an instruction of liquidating the assets of Tamha Securities, which embezzled a substantial amount of investors' shares and money, for the purpose of settling investors' claims.

Some 74 stock brokers have also been warned to refrain from unlawful activities.

A market operator, however, said the securities regulator so far formed so many probe bodies but the number of publishing the probe reports were not up to the mark.

"The regulatory actions enhanced the governance level among issuers. But, in many cases the actions against the share price manipulators are not visible," the market operator said preferring anonymity.

He said the regulatory actions taken to ensure mandatory shareholding by sponsor-directors and to conduct special audits in many listed companies are very praiseworthy.

"But the manipulators off and on become active in the secondary market to play with share prices," the operator said.

Dhaka Stock Exchange (DSE) has framed guidelines for uniform back offices of stock brokers to contain misappropriation of investors' money and shares in the backdrop of embezzling investors' money and shares by Tamha Securities using duplicate back office software.

The chief operating officer (COO) of the Dhaka Stock Exchange (DSE) M. Shaifur Rahman Mazumdar said their board and management have already taken some measures to contain the repetition of embezzlement of investors' money and shares by any rogue stock brokers.

"The exchange is trying to start the job for the settlement of the investors' claims. The exchange is very much active to settle the investors' claims lodged against three stock brokers," Mr. Mazumdar said.

He said the stock brokers will lose their business if they do not conduct operations professionally coming out of the so called practices.

The directors of the stock brokers are responsible behind the failure of their business and that's why their properties should come under the consideration in case of settlement of investors' claims, Mazumdar said.

"The consideration of directors' property for the settlement of investors' money is not mentioned in  rules and regulations, but it's implied."

To contain the misappropriation of investors' money and shares, the Central Depository Bangladesh Limited (CDBL) recently has introduced monthly e-statement services to the BO (beneficiary owner's) account holders.

The investors who included e-mail addresses in the form of BO accounts will receive real information - within the first week of every month - regarding transactions, among others, conducted in the previous month.

The information, which will be received through e-mail addresses, also include debit balance, credit balance, opening balance and closing balance.

Matching the information received from the stock brokers and the CDBL, investors will be able to check abnormal changes, if any, in their portfolios - maintained by his/her stock broker.

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