BO accounts of RACE’s Nafeez Sarafat, Hasan Taher frozen  

Infographic: TBS

The Bangladesh Securities and Exchange Commission (BSEC) has ordered the freezing of the beneficiary owner's (BO) accounts of Chowdhury Nafeez Sarafat, chairman of Bangladesh RACE Management PCL, and Hasan Taher Imam, managing director of the firm.

In a directive issued today, the stock market regulator instructed the Central Depository Bangladesh Limited and stock exchanges to take the necessary actions immediately.

BSEC is currently investigating Multi Securities and Services Ltd for irregularities in RACE-managed mutual funds.

The commission has taken these measures following a series of issues with Multi Securities and Services, a brokerage firm owned by RACE-managed mutual funds, which impeded the commission's officials from accessing its office during an ongoing investigation. 

As part of this action, the BO accounts of RACE's two key figures, Chowdhury Nafeez Sarafat and Hasan Taher Imam have been suspended. 

In addition, the BO accounts of the brokerage firm's CEO and Director Jalal Ekramul Kabir, have also been suspended. 

Reasons behind the actions

According to the order, a BSEC inquiry committee has been investigating the affairs of Multi Securities and Services Ltd and related individuals or companies since 4 July.

On 21 August, at 11:30 am, the inquiry committee conducted a spot visit to the brokerage firm's office, but the officials of the stockbroker refused to cooperate. They were unable to provide any documents or grant access to the office premises.

As a result, the inquiry committee was unable to examine any back-office software, review relevant records, or gather evidence from various documents.

The committee raised concerns about the safety and protection of the assets and securities of the account holders associated with the stockbroker and the securities under the control of the Depository Participant (DP) of the broker.

The committee remains in the dark about suspicious transactions involving Multi Securities & Services, Hasan Taher Imam, Chowdhury Nafeez Sarafat, and related individuals.

In response, the commission has instructed the depository and stock exchanges to ensure the safety and protection of investors' interests and to secure the custody of securities under Multi Securities and Services Limited.

Other restrictions on the brokerage firm

According to the BSEC order, the Non-Margin Limit Free facility for the Multi Securities & Services will remain suspended until further notice from the commission. 

Normally brokerage firms enjoy Tk10 crore as the free limit facility for daily buy-sell transactions.

The payment of dividends due against the ownership shares from the bourses to Multi Securities and Services Limited is suspended.

The eligibility for quota in initial public offerings (IPO), Repeat Public Offering (RPO), and Qualified Investors Offer (QIO) will also remain restricted.

The brokerage firm will not be able to take renewal of the certificate of registration as a Stock Broker and Depository Participant. It also will not get the facility for opening new branches or digital booths.

Any request for payment or transfer of securities to the said individuals from the brokerage firm is also suspended.

The stock exchanges will conduct special supervision of the firm for at least a year after addressing any shortfall in the Consolidated Customers' Account (CCA). 

Additionally, the CCA and the securities held in the Depository Participant (DP) account will be examined twice every month.

Besides, stock exchanges and Central Depository Bangladesh Ltd will take necessary measures to implement all the decisions and submit a report to the commission within seven working days.