Tamha Securities’ defrauds investors using software

Tamha Securities, a brokerage firm in the Dhaka Stock Exchange (DSE), has defrauded its investors by illegally using added software providing fake information on their investment status. 

A four-member inquiry committee formed by the Bangladesh Securities and Exchange Commission (BSEC) initially found the irregularities.

The brokerage firm illegally used two back-office accounting software procedures – one for the regulator and stakeholders, and the other for its clients, to provide misleading information, the committee found.

Under these circumstances, investors do not have any way to know the true facts and are thus deceived by their brokerage firms, according to investigators.

The inquiry committee has initially found a deficit of around Tk87 crore for Tamha's consolidated customer accounts (CCAs). This taka figure may increase further, said sources.

Earlier last week, the Dhaka Stock Exchange suspended the business and trading operations of the brokerage firm upon allegations of investor money being embezzled.

Market insiders said that owing to such incidents, investors are increasingly losing confidence in small brokerage houses. Bangladesh stock exchanges have repeatedly failed to effectively monitor the activities of brokerage firms, resulting in such incidents again and again.

They further said the bourses' initiatives with regard to such incidents are not satisfactory. Stock exchanges increase monitoring and other activities whenever an incident takes place but they do not take much time to forget their  responsibility and become silent onlookers as usual.

"We are losing clients due to such embezzlements as investors are moving to more compliant brokerage houses," said a top brokerage official, seeking anonymity.

Professor Abu Ahmed, a capital market analyst, said such incidents happen time and time again due to a lack of proper monitoring by the stock exchanges.

"Such incidents mostly happen in the smaller and individually-owned brokerage firms which fail to provide security for investor funds. As a result, investors are losing confidence in individually-owned brokerage firms," he added. 

He said investors prefer compliant brokerage firms where their money is secure. Recent incidents have accelerated investors switching to large brokerage firms run by banks and non-bank financial institutions.

Sharif Anwar Hossain, president of DSE Brokers Association of Bangladesh (DBA), said such incidents tarnish the image of the stockbroker community.

"The whole community is affected by such incidents. We need more supervision from the stock exchanges to minimise the irregularities," he added.

Md Harunur Rashid, managing director at Tamha Securities, said the inquiry committee is working on this issue.

"I informed the Dhaka Stock Exchange in this regard before the trading suspension. You will come to know the details once the investigation is completed," he added.

M Shaifur Rahman Mazumdar, chief operating officer of the DSE, said the trading and business operations of the company were suspended in the interest of investors.

The country's premier bourse has published a circular on its website inviting investor complaints and allegations, if any, against the brokerage firm.

Investors can now transfer their shares to other brokerage firms opening linked accounts.

As per the rules, a brokerage firm must gain approval from the stock exchange about using back-office software.

BSEC Executive Director Mohammad Rezaul Karim said the stock exchanges and the securities regulator visit brokerage firms on a regular basis but some incidents happen suddenly.

He said routine inspections of brokerage firms will increase considerably to protect the interests of investors.

Earlier, trading operations of Banco Securities and Crest Securities were suspended due to allegations of embezzling investor monies.

Banco Securities faces allegations of embezzling Tk66 crore from consolidated customer accounts while Crest Securities has allegedly embezzled Tk48 crore in the same way.

Shah Mohammad Sagir Securities, Dawn Securities, Sylhet Metro City Securities, Trendset Securities, and Moharram Securities Limited have also allegedly embezzled investor monies similarly.

There are 250 brokerage firms in the Dhaka Stock Exchange and 148 in the Chittagong Stock Exchange 8providing brokerage services to their customers.  

This year, the regulator issued 52 brokerage licences for the DSE and 23 others for the CSE.