BSEC launches probe into 4 intermediaries over market irregularities
Four enquiry committees were formed on 11 March to conduct the investigations.
The Bangladesh Securities and Exchange Commission (BSEC) has launched investigations into four capital market intermediaries over allegations of serious irregularities, in a move aimed at protecting investors and ensuring market stability.
Through separate orders, the regulator has initiated formal enquiries into NRBC Bank Securities Limited, Premier Leasing Securities Limited, Green Delta Securities Limited, and LankaBangla Investments Limited, operating as a merchant bank.
Four enquiry committees were formed on 11 March to conduct the investigations.
BSEC director and spokesperson Abul Kalam told TBS that the Commission had identified multiple inconsistencies in the operations of these firms, particularly relating to negative equity, margin lending practices, financial reporting, and corporate governance.
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He said such irregularities could increase market risks and harm general investors, prompting the regulator to take action. The Commission will take legal measures after reviewing the enquiry findings, he added.
Separate officials have been assigned to each investigation. The probe into NRBC Bank Securities will be led by Deputy Director Md Rafiqunnabi and Assistant Director Muhammad Sadequr Rahman Bhuiyan.
Additional Director Md Ohidul Islam and Assistant Director Md Maruf Hassan will investigate Premier Leasing Securities, while Additional Director (Legal) Muhammad Ziaur Rahman and Assistant Director Amit Kumar Saha will examine LankaBangla Investments.
Additional Director Umme Salma and Assistant Director Md Motiur Rahman have been tasked with investigating Green Delta Securities.
The commission has directed that all enquiry reports be submitted within 60 working days.
The allegations
One of the key focus areas of the investigations is whether any of the firms declared or facilitated cash dividends despite having negative equity or unrealised losses.
Under market rules, such actions may mislead investors and conceal a company's true financial condition.
In particular, NRBC Bank Securities and LankaBangla Investments will be examined to determine whether they made or supported such dividend decisions.
The BSEC has also raised concerns that some firms may have misreported or concealed negative equity data in regulatory filings. In the case of NRBC Bank Securities, allegations of systematic misreporting and data manipulation are under scrutiny.
Premier Leasing Securities is accused of classifying receivables from clients as assets without maintaining adequate provisioning, potentially understating financial risks in its disclosures.
A common allegation against all four firms is the failure to maintain sufficient provisions against negative equity and unrealised losses within prescribed timelines, raising concerns over their financial stability.
In the case of Green Delta Securities, the Commission will closely examine the methodology used in calculating negative equity. Issues include capitalising prior-year interest into principal, mismatches between principal and interest figures, and the absence of necessary provisions.
Wafi Shafique Menhaz Khan, CEO of Green Delta Securities, said the matter is a routine issue from the regulator.
"We have received the letter and are cooperating with the Bangladesh Securities and Exchange Commission in the investigation," he told The Business Standard. "The violations identified by the Commission regarding negative equity are very minor in nature. The Commission has also conducted a similar enquiry earlier," he added.
The investigations will also examine margin lending practices across the firms, including whether loans exceeded permissible exposure limits and whether margin discipline was bypassed.
There are allegations that cash accounts were converted into margin or negative equity accounts without proper authorisation. In some cases, margin accounts may have been opened without client consent or formal agreements.
The BSEC has further alleged that certain firms conducted transactions involving highly speculative shares through negative equity accounts, as well as illegal block and bulk transactions in violation of regulatory rules.
Such activities – particularly in NRBC Bank Securities and Premier Leasing Securities – will be examined to determine whether they were used to create artificial demand or manipulate share prices.
In LankaBangla's case, it faces additional scrutiny over specific financial reporting issues, including the use of "interest suspense" accounting and whether such figures were properly reflected in its financial statements.
The firm is also accused of failing to recognise around Tk109.73 crore in interest payable to LankaBangla Finance Limited, which may have led to an overstatement of profits and retained earnings.
Iftekhar Alam, CEO of LankaBangla Investments, did not respond to phone calls and messages regarding the matter.
Another key aspect of the investigations will be to assess the role and intent of senior management, including chief executives, managing directors, and board members, in relation to the alleged irregularities.
According to the BSEC, weaknesses in corporate governance may have allowed such practices to persist.
Market insiders said the investigations could play an important role in restoring discipline in the capital market, where concerns over negative equity, margin lending practices, and weak enforcement have persisted.
The move is widely seen as a strong signal from the regulator against non-compliance and governance failures in the market.
