14 stock brokers to face music for breaking loan rules
The stock brokers have provided Tk74.48 crore to investors who are not entitled for the loan
The Bangladesh Securities and Exchange Commission (BSEC) will take action against 14 brokerage houses for providing loans to investors violating rules.
The securities regulator has already instructed its enforcement department to take regulatory action against the errant brokers, sources said.
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According to the margin rules, only those investors who have accounts entitling to loans will avail the facility to expand their stock investment.
However, the these 14 stock brokers provided the margin loan facilities to non-marginable clients – those who have only cash accounts for stock investment and are not entitled to the loan facility.
The stock brokers have given Tk74.48 crore to their non-marginable clients.
BSEC Executive Director and spokesman Md Saifur Rahman told The Business Standard that the commission has decided to take action against the brokerage houses on charge of violating margin rules.
Earlier, the Dhaka Stock Exchange (DSE) served a notice on 16 brokerage houses to comply with the margin rules by December 31, 2019.
Of them, only two firms – Investment Promotion Services and Hazrat Amanat Shah Securities – complied with the rules.
Azam Securities, Al-Muntaha Trading Company, E-Securities, Royal Capital, Tamha Securities, Ali Securities, Ettihad Securities, Saad Securities, Thea Securities, Al-Haja Jahanara Securities, Joytun Securities, Shah Mohammad Sagir & Company,
Sharp Securities and Modern Securities failed to correct the violating condition.
Meanwhile, the operation of Shah Mohammad Sagir & Company remains closed, meaning there is no possibility for the house to comply with the rules.
Besides, Joytun Securities International and Modern Securities sought time till December 31, 2021 to comply with the rules.
Fatema Khatun, chief executive officer of Joytun Securities, said, "In 2010, some investors took advantage of the bubbling market. But, when the investors suffered massive loss in their businesses, they did not communicate with us."
"We are trying to comply with the rules but we need time for that. We have already appealed to the securities regulator seeking time extension," she added.
An official of Azam Securities said, "We are trying to comply with the rules. We have waived up to 80 percent of the interest of loans to some investors. Still they have not come back."
He also said, "Some investors took advantage during the time of the bubble. When they suffered losses, they disappeared."
