The Bangladesh Securities and Exchange Commission (BSEC) has ordered the Dhaka Stock Exchange (DSE) to ensure the return of Tk 399.49 crore from 57 brokers and dealers who had diverted these funds from their core stock business.
The directive, issued on Thursday, mandates that the funds be reinstated by October 31 this year. The BSEC's order shows findings from compliance reports and audited financial statements of both the DSE and the firms in question, revealing that these firms misused their funds, violating securities regulations.
The BSEC has found evidence of these institutions' investments worth Tk 399.49 crore out of the stock market. The commission has directed the DSE to return this money to the institutions by October 31 of this year. The regulatory body also directed the prime bourse authorities to supervise and monitor the funds' return and submit a report on the compliance status to the commission within seven working days.
First occurrence
The securities regulation, formulated in 2021, bars investments made by stock brokers and dealers outside their core businesses except in the stock market. This stipulates that all brokerage firms are only allowed to disperse their accountable amount into the country's stock market. Any deviation from that process will result in BSEC-mandated actions.
However, since this is the first occurrence of such misappropriation, the regulator has allowed the firms and brokers in question to disperse the Tk 399.49 crore back into the markets by October of this year.
The stock market regulator found that 57 broker and dealer firms in question misappropriated Tk 399.49 crore by investing in non-listed companies, providing loans to their sister concerns, purchasing land and flats, and placing funds in Fixed Deposit Receipts (FDRs) instead of focusing on their core business activities.
Notable among these firms are Akij Capital Management, Multi Securities and Services, Sheltech Brokerage, Moshihor Securities, Salta Capital, and KHB Securities, each of which has diverted more than Tk 20 crore from their primary business operations.
The extent of it
Regarding the overall discrepancies, the BSEC order notes that these matters need further investigation in light of the securities regulations.
Meanwhile, the data shows that Rashid Investment Services invested Tk 2.93 crore in shares of Rashid Trade Consortium, paid advances on land purchases, and directed funds towards a current account with a sister concern. AB Ispahani Securities provided an advance of Tk 53,00,000 to MM Ispahani Ltd. ACE Capital Management Services provided an advance of Tk 4.50 crore for purchasing a flat and a car parking space.
Daulatunnessa Equity kept Tk 4.69 crore in FDRs, while Rapid Securities paid Tk 6.21 crore for land purchases. M-Securities spent Tk 1.50 crore on land acquirement, buildings, and other purchases. Aries Securities invested Tk 6.47 crore in Aries Agro (BD) and towards advances against land purchases in Munshiganj.
First Capital Securities provided a loan of Tk 63,00,000 to its director to purchase a motor vehicle and acquire land. Multi Securities & Services made various capital fund investments and financing, including in a non-listed equity and an advance to Diplomat Properties, totalling Tk 31.93 crore.
Meanwhile, Royal Green Securities invested Tk 18.48 crore in non-listed companies and provided advances against land and building purchases. Latif Securities invested Tk 11.74 crore in Sarker Steel, while Md Fakhrul Islam Securities invested Tk 15.58 crore in Mohona TV and provided advances towards Parabat Social Inf, Rupayan Golden Age, and purchased land in Araisprasad.
Dayton Holdings provided a loan worth Tk 5 crore to Aman Spinning Mills. Island Securities invested Tk 16.37 crore in the BLP Compliant Factory Project with receivables from BLP Warn Fashion and other ventures. Ettihad Securities paid an advance of Tk 2.70 crore for acquiring land. Surma Securities Holdings Company invested Tk 7.32 crore in Hill View Convention Center and M/s J&S Packaging. Moshihor Securities, however, made an investment worth Tk 21.91 crore in an associate company.
Additionally, Nouvelle Securities, CMSL Securities, Nabiul Karim Securities, ANF Management, Dragon Securities, Rose Securities, RNI Securities, Kazi Equities, and Al-Haja Jahanara Securities have all made investments outside their core business.
Among others, Cosmopolitan Securities misappropriated Tk 2,00,000, Fortune Securities number was Tk 10.86 crore, Shakil Rizvi Stock's was Tk 3 crore, EMES Securities was Tk 4 crore, Peace Securities was Tk 90,00,000, Trustee Securities was Tk 4.17 crore, Mona Financial Consultancy Tk 10 crore, Subvalley Securities was Tk 2.81 crore, Doreen Capital was Tk 13.91 crore, GMF Securities was Tk 10.26 crore, Globe Securities was Tk 8.53 crore, Anwar Khan Modern Securities' was Tk 8.60 crore, Stock and Bond's amount was Tk 58,00,000, and Total Communication misappropriated Tk 6.72 crore.
PriLink Securities used Tk 5.20 crore outside its core business, while Oshadhi Securities' number was Tk 1.78 crore. AD Holdings Tk 1.50 crore, Mika Securities' was Tk 40,00,000, Akij Capital Management Tk 33.42 crore, Dhaka Securities' was Tk 2.40 crore, Prudential Capital was Tk 5.30 crore, Be Rich was Tk 13.49 crore, Rahman Equity was Tk 50,00,000, Benemoy Securities' amount was Tk 63,00,000, Innova Securities spent Tk 75,00,000, and finally, Gibson Securities misappropriated Tk 1.51 crore.
