BSEC withdraws suspension on BO accounts of RACE-managed mutual funds

The Bangladesh Securities and Exchange Commission (BSEC) has withdrawn its earlier order that suspended all beneficiary owner (BO) accounts of mutual funds managed by Bangladesh RACE Management PCL.

Rezaul Karim, spokesperson and executive director of the BSEC, told The Business Standard that two separate cases related to the matter are currently pending in the High Court. Since the issue is sub judice, the BSEC decided to lift the suspension, he added.

While RACE did not return comments, its legal counsel Md. Mustafizur Rahman, Bar-at-Law responded "Our client RACE Management and Dr. Hasan Imam have been subjected to long legal harassment. But ultimately justice has prevailed in the courts. One Ruhul Amin Akhand's law suit was dismissed by the Dhaka District Court after investigators found no proof of wrongdoing by Dr. Hasan Imam. The other malafide law suit by Chowdhury Nafeez Sarafat has also been dismissed by the High Court for non prosecution.

Sources also said RACE has written to the BSEC, the bourses, and the Bangladesh Financial Intelligence Unit (BFIU), asking them not to take any action until the cases are resolved.

On 24 June 2024, the BSEC had suspended the BO accounts of RACE-managed mutual funds, citing concerns over the fund manager's failure to protect unit holders' interests. 

The suspension required trustees to take control of the BO accounts and transfer all securities to custodial accounts within seven days.
Total assets under RACE were over Tk3,000 crore, according to the BSEC.

With the withdrawal of the suspension order, the 10 closed-end and two open-end mutual funds managed by RACE will resume normal operations. 

These funds include EBL First, Trust Bank First, IFIC Bank First, First Janata Bank, Popular Life First, PHP First, EBL NRB, AB Bank First, Exim Bank First, First Bangladesh Fixed Income Fund, RACE Financial Inclusion Unit Fund, and RACE Special Opportunities Unit Fund.

According to the fund manager's website, Investment Corporation of Bangladesh (ICB) played the custodian role for six closed-end funds and BRAC Bank for four funds.

Moreover, ICB acts as trustee of six closed-end funds, and Bangladesh General Insurance Company (BGIC) for four funds.