'Current placement system in stock market a big fraud'

Abu Ahmed, a former professor at Dhaka University, has criticised the current placement system in the stock market, describing it as a major fraud. 

Speaking as the chief guest at a training programme organised by the Capital Market Journalist Forum (CMJF) on Wednesday, Ahmed questioned the need for placement shares given the existence of an underwriting system.

Previously, if an Initial Public Offering (IPO) was not fully subscribed, the underwriter would take the remaining shares. "There had been a sudden shift to placements, where shares were allocated without full payment. This is a big fraud," he said.

The former DU professor also pointed to placement share trading before listing as another significant source of corruption, accusing regulators of failing to address the issue. "The regulator has not acted on this," he said.

He expressed disappointment at the minimal involvement of mutual funds in Bangladesh's capital market, contrasting it with their crucial role in other countries. According to Ahmed, no notable IPOs have emerged in the last decade, with the exception of Robi and Walton.

Reflecting on the Bangladesh Securities Exchange Commission (BSEC), Ahmed mentioned its establishment in September 1993, a result of his personal efforts. "Many predicted that this commission would become a problem for the market. I see that reality now," he said.

Regarding Islami Bank, he said, "Why are there such substantial reserves and deposits? The bank was taken over by unscrupulous parties in 2017. I urge the current government to intervene and protect the bank."

Ahmed also said that the government faces significant challenges in managing the economy and suggested that selling government shares could help alleviate the budget deficit.