Crest Securities failed the exchange’s trade settlement on May 23 and on the very next day the exchange froze the firm’s assets and its directors’ bank accounts
The Dhaka Stock Exchange (DSE) has assured cheated clients of the Crest Securities Ltd that they will get their shares and money back.
"We have frozen all the assets of the firm and its directors, and requested the government to take steps so that the directors cannot leave the country. The assets would be enough to settle the claims from brokerage firm's clients," said Kazi Sanaul Hoq, managing director of DSE.
In an online press conference on Sunday the DSE managing director said the member firm – which has around 21 thousand client accounts – did not have any shortage in last month's consolidated report.
It failed the exchange's trade settlement on May 23 and on the very next day, the exchange froze the firm's assets and its directors' bank accounts in accordance with instructions from the securities regulator.
Clients of the eighth member firm of the premier bourse still have securities worth Tk82 crore, according to the central depository system data. The owners of the securities can transfer those to a new investment account.
The DSE is inviting applications from Crest Securities clients who already have suffered embezzlement of securities or money from beneficiary accounts.
"We are preparing the list of the firm's assets and also will have the investors' claims. If the liquid assets surpass the investors' claims we would sell away the firm's brokerage license and the DSE shares it owns," said Hoq.
His prima facie expectation is that investors' claims will not be too big.
However, the exchange cannot help any loan provider to the Crest Securities.
Some of Crest Securities clients have complained that the broker had sold off their shares and they were neither notified by SMS or email nor they received the proceeds from the broker.
Some of these clients have already sued its owners for embezzling their funds.
The incident has triggered a fear among investors who trust the system where the broker is bound to act as a primary custodian of their securities and investable money in Beneficiary Owners (BO) accounts.
Meanwhile, to prevent any further incident like this, the DSE has already called each of their members' account details within three days while a five-member committee is working to take care of the clients of Crest Securities Ltd.
Currently the exchanges address any irregularity among its brokers only when they fail in the settlement process—paying the price of bought securities and handing over the securities they sold on behalf of clients.
Lack of IT based integration with the banking industry is now not allowing real time monitoring of brokerage firms' transactions with its clients.
The Bangladesh Securities and Exchange Commission (BSEC) is working to develop such collaboration in coming days, said the DSE managing director.
At present, the exchanges inspect member firms and call the details of their transactions with clients, when it appears to be necessary.
Meanwhile, a routine inspection also helps the exchanges to send a message to the members that any misconduct would be identified eventually.