Bangladesh Securities and Exchange Commission (BSEC) issued an order on Monday suspending all BO accounts under the Bangladesh RACE Asset Management Company's mutual funds to protect holders' interests.
RACE holds the highest market share in the country's mutual funds sector, with 49.2 per cent of the total 10 funds and assets under management (AuM) worth Tk 26.7 billion.
The stock market regulator took the decision following an inquiry that revealed the fund manager's compliance issues. As per the BSEC order, the suspension will have immediate effect.
"The respective trustees of the mutual funds managed by Bangladesh Race Management are required to take control of all BO IDs opened and maintained with any stock broker in the names of their respective mutual funds and report to the commission with detailed holding statuses within the next seven working days from the issuance of this order," reads the BSEC order.
The regulatory body also directed that every custodian of the mutual funds under RACE's management ensure the closure of BO IDs opened and maintained in the brokerages.
According to the order, each concerned party of the mutual funds under the management of Bangladesh RACE Management will report to the commission in detail about their steps and compliance status under this order within the next 10 working days from the issuance of the order.
Despite a court ruling, the bank accounts of RACE Asset Management and its funds remain frozen. In response, RACE has applied to re-open these accounts, prioritising the interests of the concerned parties and investors.
A RACE Asset Management shareholder, allegedly acting in their own volition, reportedly claimed to be the authorised bank signatory for the company's mutual funds. However, RACE denied the request, citing regulations governing mutual funds.
The disgruntled shareholder, upset by the company's refusal, filed a complaint with BSEC. This prompted the BSEC to freeze the company's fund accounts despite a prior court order to maintain the status quo.
In light of the shareholder's complaint, BSEC formed an inquiry committee. Additionally, the shareholder filed a case in this regard and obtained an ex-parte interim order for 30 days from the High Court.
