The DSE Brokers Association (DBA), a platform of trading right entitlement certificate (TREC) holders of the premier bourse, has raised allegation of widespread corruption and irregularities against former chairman of Bangladesh Securities and Exchange Commission (BSEC) M Khairul Hossain and the recently resigned chairman Shibli Rubayat-Ul-Islam.
In light of this situation, there is now a demand for the reformation of the BSEC. Along with this, the DBA has requested that those on the current DSE board, including the chairman who was politically appointed, step down immediately. Otherwise, they called for the board to be restructured by the interim government.
DBA President Saiful Islam levelled the allegations and made the demands at a press conference at the Dhaka Club in the capital on Monday.
He said, "We believe that the [interim] government will work towards building a non-discriminatory, corruption-free and developed state. They will ensure good governance at all levels and make the country financially prosperous. We are ready to provide all kinds of support from our association to this government for the improvement of the capital market."
After the stock market crash of 2009-2010, millions of investors lost their capital and were left devastated. Many institutions that provided margin loans for share purchases went bankrupt. Since then, the market situation has not improved, causing many investors to leave the market after suffering repeated losses, Saiful said.
To find the cause of the market crash and identify those responsible, a probe committee was formed under the leadership of the late Ibrahim Khaled, the former deputy governor of Bangladesh Bank. However, no action has been taken against the individuals and institutions identified in their investigation report as being involved in market manipulation. As a result, the same group has become more active and has siphoned off thousands of crores of taka, he said.
From 2011 to 2024, for nearly 14 years, Khairul and Shibli served as chairmen of the BSEC. Both came from academic backgrounds and assumed these roles. During this long tenure, their unprofessional and unethical activities resulted in no market improvement; instead, investor confidence reached rock bottom,” he said.
The DBA president said that after the 2010 market crash, Khairul and Shibli took charge of the market with commitments to stop insider trading, ensure transparency, good governance and accountability in the market, restore investor confidence by bringing in high-quality IPOs, halt the chaotic placement trade, and ensure transparency and accountability in companies' audited financial reports. However, they failed to keep their promises.
The amount of corruption and irregularities that took place in the IPO process over the past 14 years is extremely concerning. Unfit, weak, low-quality and bankrupt companies were listed through IPOs. These issues have been highlighted in the media, with the weaknesses and negative aspects of each IPO being extensively reported, he said.
Recently, BSEC got involved in extensive irregularities under the name of "floor price". This floor price obstructed share trading and negatively impacted the market's normal transactions and investments. The floor price rule was an illogical and harmful measure that interfered with investors' freedom. As a result, a significant portion of domestic and foreign investors turned away from the market, he added.
Like in other countries, the power to list and delist IPOs should have been in the hands of the Dhaka Stock Exchange as the primary regulator. However, in Bangladesh, BSEC holds all the power in the IPO listing process, leaving the stock exchange with little to no role. The responsibility for bringing substandard IPOs into the market thus falls on BSEC, Saiful said.
He further stated that there are still individuals in the boards of DSE, CSE, CDBL and CCBL who were appointed based on political considerations. Their inexperience and lack of foresight have hindered the progress of these institutions. “We demand that these politically appointed individuals be removed and that competent and experienced professionals be appointed to reorganise these institutions.”
He also criticised the establishment of the Capital Market Stabilisation Fund, questioning its legality. This fund, which was formed under the instructions of the then-government, is accused of misappropriating the dividends of investors. “We demand that this institution be shut down and that the money taken is returned to its rightful owners immediately.”
BSEC has organised roadshows abroad, which have been extremely detrimental to the country's economy. Instead of attracting investment, these roadshows resulted in a significant loss of foreign currency. “We demand the publication of white papers on each roadshow, disclosing the amount of money spent and how much was earned in return,” Saiful said.
“The past two commissions have, over the last 13-14 years, turned our long-established, disciplined, and promising market upside down. Many dishonest and corrupt officials within the commission have been involved in these misdeeds. These officials, motivated by greed for position and power, have colluded with the commission to ruin market traders,” he added.
There are numerous complaints of unethical money-making against these influential officials within BSEC. Many dishonest traders, who have fostered close relationships with the previous commissions, continue to destroy the market. It is now time to investigate these corrupt individuals and take legal action against them to restore investor confidence in the capital market, said the DBA president.
