BSEC seeks travel embargo on directors of Dhanmondi, PFI Securities
According to the Dhaka Stock Exchange, as of 21 August 2024, PFI Securities Limited had a deficit of Tk28.18 crore in its Consolidated Customer Account (CCA), while Dhanmondi Securities Limited had a deficit of Tk7.74 crore as of 20 August 2024
The Bangladesh Securities and Exchange Commission (BSEC) has requested authorities concerned to impose a travel ban on the directors and senior officials of Dhanmondi Securities and PFI Securities Ltd due to their failure to resolve the deficit in investors' funds.
The decision was made during a meeting on Wednesday (11 September), according to a BSEC press release.
According to the Dhaka Stock Exchange, as of 21 August 2024, PFI Securities Limited had a deficit of Tk28.18 crore in its Consolidated Customer Account (CCA), while Dhanmondi Securities Limited had a deficit of Tk7.74 crore as of 20 August 2024.
A CCA is a separate bank account maintained by stockbrokers to hold unused cash from their clients' beneficiary owner (BO) accounts.
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The commission granted a deadline to address their deficits, but the two brokerage firms failed to resolve the issues within the given time. The commission has denied any extension for addressing the deficits.
All quota facilities for the two brokerage firms have been suspended. This suspension includes the free limit facilities typically granted to defaulting firms by the stock exchanges, IPO quota benefits for qualifying as investors, and dividends received as members of the stock exchanges.
If the brokerage firms fail to comply, their digital booths and branch openings will be suspended. Additionally, their depository participant licences will not be renewed until they clear their dues.
The commission has also prohibited the directors and top officials from withdrawing funds from their bank accounts and has suspended the beneficiary owner's (BO) accounts for these individuals.
Dhanmondi Securities has four directors — Md Mizanur Rahman Khan, Managing Director of the firm, Akhter Jahan Khan, Mazbah Uddin, and Asif Islam Khan.
On the other hand, PFI Securities has 12 directors, including Kazi Fariduddin Ahmed, the firm's managing director, Tarique Ekramul Haque, Naseem Iqbal, Shahriar Khaled, K M Rakib Hassan, and Kazi M Salman Sarwar. Among these, six are individual directors and six are corporate directors.
It is strictly prohibited to use CCA funds for any purpose other than paying for securities purchased by the client or collecting commissions or fees owed by the client. Any unauthorised use of funds from the CCA would result in a deficit.
DSE Brokers Association (DBA) President Saiful Islam told TBS earlier that the securities regulator did not take effective action when instances of misappropriation were discovered. If the responsibility were given to the stock exchanges, it would be more effective.
Market insiders have said that the BSEC and the stock exchanges should be more accountable and take stronger action against these issues.
Earlier, Moshihor Securities Ltd misappropriated the client's funds invested in the capital market for years, evading regulatory oversight by employing multiple servers and databases, according to a letter sent by the DSE to the securities regulator.
As of 19 August 2024, the DSE identified a Tk68.58 crore shortfall in Moshihor Securities' CCA, down from Tk75 crore as of 2 May 2024.
On 29 August 2024, the BSEC formed a five-member probe committee against Moshihor Securities after receiving a report that the brokerage firm had misused a total of Tk161 crore, including Tk68.58 crore of investors' money and Tk92.35 crore of investors' shares. As a result, the commission has suspended all facilities for the firm due to the deficit.
