BSEC urges Dhaka bourse to expedite the settlement of claims by defrauded investors 

The Bangladesh Securities and Exchange Commission (BSEC) has directed the Dhaka Stock Exchange (DSE) to settle the claims of all the defrauded investors of brokerage firms - Crest Securities, Banco Securities, and Tamha Securities - as soon as possible.

Last week, the commission verbally urged the bourse to expedite the matter.

According to sources, the BSEC wants to speed up the settlement process because the longer the investors suffer, the more they will lose confidence in the capital market.

Therefore, to protect the interest of the investors, the issues need to be resolved immediately, deemed the regulator.

Sources said the DSE will consult its panel of lawyers on feasible ways to collect money from the brokerage firms at the earliest. If required, the exchange may also take the three firms to court to settle the claims.

Around 9,500 claims summing up to Tk120 crore have been submitted to the DSE. Of the amount, Tk43 crore is only monetary claims, Tk42 crore is both money and share claims, and the rest of the amount includes other claims such as bank loans.

Earlier, the BSEC had instructed the management of Tamha Securities to sell off assets, which will be implemented according to the deed agreement among the directors of the company.

Tamha Securities secretly introduced a parallel software database to report fake cash and securities balances, and fake buy-sell order execution updates to clients and the regulator.

The company embezzled at least Tk64 crore of client assets as acknowledged by its managing director, while a BSEC investigation suggests that the amount might be as high as Tk140 crore.

In June last year, DSE suspended the trading operations of Banco Securities and Crest Securities as the firms allegedly embezzled around Tk70 crore and Tk50 crore respectively from their investors' accounts.

A dozen brokerage firms including Shah Mohammad Sagir Securities, Dawn Securities, Sylhet Metro City Securities, Trendset Securities, and Moharram Securities Limited have also allegedly embezzled investors' money similarly. But the bourses are yet to settle the investors' claims, said the market experts. 

They said the stock exchanges should have real-time entry access into the brokerage firms' IT systems for effective monitoring, and also, they should be made a signatory in the brokers' consolidated customer bank accounts so that no client money is siphoned.

DSE has an investor protection fund and it should be strengthened so that the bourse itself can initially clear off any such liability of any brokerage firm, and later try to recover from the responsible member, they added.