BSEC slaps over Tk1cr fine on four firms, officials over malpractice

The Bangladesh Securities and Exchange Commission has imposed fines totalling Tk1.09 crore on four institutions and their officials over securities law violations, fraudulent activities involving investors, and irregularities in share trading.

The four firms are NBL Securities Limited, Gibson Securities Limited, UCB Stock Brokerage Limited and listed company Khulna Printing & Packaging Limited.

The penalties were imposed in April after the regulator found their explanations to be unsatisfactory following hearings.

According to BSEC findings, NBL Securities was fined Tk10 lakh for failing to preserve clients' buy and sell orders, executing unauthorised trades without client consent, failing to resolve complaints within the stipulated timeframe, and engaging in professional misconduct. 

The company's former managing director Zobayed Al-Mamun Hasan was fined Tk5 lakh, while former chief anti-money laundering compliance officer and assistant vice president Farzana Ferdausi was fined Tk3 lakh. Altogether, the firm and its officials were fined Tk18 lakh.

The BSEC found evidence of serious fraudulent conduct by UCB Stock Brokerage Limited against its client Md Ayub Ali. The investigation revealed that the brokerage regularly sent fake portfolio statements to the client's registered email address while concealing the actual portfolio information. Although genuine portfolio statements were sent until 24 August 2022, fake statements continued to be sent to the same email address until 18 July 2024.

The regulator also found that the client's mobile number had been intentionally altered with an incorrect number so that he would not receive CDBL notifications regarding share transactions. As a result, the client remained unaware of trading activities in his account. The investigation further revealed that fake portfolio statements had been sent using the personal email account of a company employee, which BSEC described as a serious offence.

For these violations, UCB Stock Brokerage was fined Tk30 lakh. In addition, its Managing Director and CEO Mohammed Rahmat Pasha and official Md Sahiduzzaman were fined Tk15 lakh each. Besides, Compliance Officer Md Rafiqul Islam and official Abdul Ahad Sheikh were fined Tk3 lakh each. In total, the brokerage and its officials were fined Tk66 lakh.

Meanwhile, the BSEC uncovered multiple serious irregularities at Khulna Printing & Packaging Limited. The investigation found that the company had incurred losses for three consecutive years, failed to declare any cash dividends, and accumulated retained earnings deficits exceeding its paid-up capital. As a result, the company fell under BSEC's "Exit Plan" criteria.

The regulator also found that the company had failed to pay listing fees to the Dhaka Stock Exchange for more than three years. Additionally, it did not submit monthly shareholding and free-float reports since October 2022 and failed to file quarterly and annual financial statements after June 2022.

The investigation further revealed that the company's production activities had remained shut down for a prolonged period without disclosure as price-sensitive information. The BSEC also noted that the company's website was non-functional and that the positions of company secretary and chief financial officer had remained vacant for an extended period, violating corporate governance requirements.

For these violations, the commission fined Chairman SM Amzad Hossain, directors Md Amzad Hossain and Khan Habibur Rahman, Managing Director Sufia Khatun, CFO Md Ezaz Uddin, and Company Secretary Milan Khan Tk4 lakh each, amounting to a total penalty of Tk24 lakh.

In another case, the BSEC fined Gibson Securities Limited Managing Director Mohammad Gulam Mustafa Tk1 lakh for violating securities laws.