DSE to pay defrauded customers from investors' protection fund

The country's premier bourse Dhaka Stock Exchange (DSE) is set to disburse claims of the defrauded customers of four brokerage firms from the DSE Investors' Protection Fund that was formed nearly a decade ago.

According to the DSE, 8,561 customers have filed claims totalling more than Tk200 crore till 1 October this year.

But for now, the DSE will disburse Tk25 crore, which is around one-eighth of the total claim, on a pro-rata basis.

And, the amount will be disbursed in such a way that the clients of the brokerage house that embezzled the most amount of money will get the highest portion, and clients of the one that took the least amount will get the lowest portion.

The DSE will hand over the account payee cheques to the customers from today through a program, and by the end of the week, all the affected customers will receive the first phase payment through banking channels.

After its formation back in August 2014, this is the first time the DSE Investors' Protection Fund, which was created to protect the interest of investors in case of any default by brokerage firms, will be used.

Dhaka bourse's Managing Director ATM Tariquzzaman told TBS, "We will start paying the affected investors from Monday."

"A large number of customers have filed claims against the brokerage firms. Verifying the data, we will complete the disbursement of the funds on a pro rata basis as soon as possible," he added.

The four brokerage houses that have been on the news for defrauding their customers are Crest Securities, Banco Securities, Tamha Securities, and Shah Mohammad Sagir & Company Limited.

According to DSE, the brokerage firms sold shares of their clients without informing, and embezzled funds from the consolidated customers' accounts (CCA).

Therefore, the Bangladesh Securities and Exchange Commission, on 1 October this year, directed the Dhaka bourse to settle the claims of the defrauded investors from the DSE Investors' Protection Fund.

In June 2022, the DSE had settled some claims through Bangladesh Electronic Funds Transfer Network (BEFTN). Till now, the bourse has disbursed Tk4.76 crore to 431 investors.

The four brokerage firms

According to the DSE, Tamha Securities embezzled Tk139.67 crore by illegally using added software and providing fake information to clients about their investment status. Of the amount, Tk92.57 crore was cash and Tk47 crore securities.

In June 2021, the DSE suspended the trading of its member Banco Securities for the embezzlement of Tk60 crore.

The bourse found a deficit of Tk128 crore in Banco's consolidated customer account. Of this, Tk66.11 crore was cash, and Tk61.97 crore securities.

Crest Securities closed its operations and also shut down its office without any prior announcement. The DSE found a deficit of Tk65.30 crore in the company's CCA. Of this, Tk44.90 crore was cash, and Tk20.40 crore securities.

Finally, Shah Mohammad Sagir & Company that embezzled Tk13.74 crore was suspended because of its failure in trade settlements.