DSE asked to explain non-payment of claims from Investor Protection Fund
The fund has only Tk19 crore and the DSE is yet to pay the claims of investors from the fund
The securities regulator has sought explanations from the Dhaka Stock Exchange (DSE) about why the bourse has still not paid the claims of the defrauded investors from the DSE Investor Protection Fund.
On 28 August, the Bangladesh Securities and Exchange Commission (BSEC) asked the Dhaka bourse to submit detailed documents about the protection fund within ten working days.
Earlier, four brokerage firms — Tamha Securities, Crest Securities, Banco Securities, and Shah Mohammad Sagir & Company — embezzled investors' money from their beneficiary owner (BO) accounts.
Therefore, the BSEC decided to settle the claims of the defrauded customers of these brokerage houses with the money available in the protection fund.
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The fund has only Tk19 crore and the DSE is yet to pay the claims of investors from the fund, said DSE acting Managing Director M Saifur Rahman Majumdar.
This June, the BSEC formed a five-member inquiry committee to look into the DSE Investor Protection Fund.
The committee was given 60 days to check whether the money that was supposed to have been in the protection fund was deposited and safeguarded there.
DSE's acting MD told The Business Standard, "As the fund is under review, the Dhaka bourse will not settle any claim until the investigation is over."
After the completion of investigation, the stock exchange will act as per the regulatory decision, he added.
BSEC Commissioner Dr Shaikh Shamsuddin Ahmed said, "We sought documents from the DSE in this regard. If the commission finds any anomalies about the fund, then it will take initiatives."
Professor Abu Ahmed, a capital market expert, earlier said that the existing system in brokerage firms should be changed because in the current one, investors' money is not secured.
"Investors' money should be linked with their bank accounts instead of that of the brokerage firms," he added.
The DSE Investor Protection Fund came into being through a gazette notification in August 2014. The fund was created to protect the interests of investors in case of any default by brokerage firms.
Embezzlement by four brokerage firms
According to the DSE, Tamha Securities embezzled Tk139.67 crore of clients' money by illegally using added software and providing fake information on their investment status. Of this, Tk92.57 crore was cash and Tk47 crore securities.
In June 2021, the DSE suspended the trading of Banco Securities for the embezzlement of Tk60 crore, according to its primary findings.
Crest Securities embezzled Tk65.30 crore from the firm's consolidated customer account. Of this, Tk44.90 crore was in cash, and Tk20.40 crore securities.
Besides, the country's premier bourse suspended the transactions of Shah Mohammad Sagir & Company Ltd because of the firm's failure in trade settlements. After an inspection, the DSE found that the brokerage firm embezzled Tk13.74 crore.
