Sylhet Metro City Securities embezzled investors’ fund worth Tk 12.63 crore in 2014 by selling shares of their clients without their consent. The Chief Executive of the brokerage house left the country without repaying investors money. The broker also destroyed all accounts-related information of the investors. In September this year, the Chittagong Stock Exchange suspended Trading Rights Entitlement Certificate (TREC) of another brokerage house. But by obtaining a High Court stay order, the said house is still continuing their fraudulence. Another brokerage house named Chittagong Bourse Trendset Securities has embezzled investors’ funds amounting to Tk 24 crore in 2007-2009. After that, the CSE confiscated the TREC of the house and sold the firm to settle the investors’ claims, but investors are yet to get their full money back. A significant number of investors’ complaints about fund fraud by a number of brokerage houses have also been pending with the SEC which received 26 such complaints in July-September this year.
As per the regulation, brokerage houses do not require any asset of its own to be considered as security fund to deal with clients’ funds. It means that anyone can handle crores of taka of clients provided he/she has only a TREC.
Laxity of legal provisions have simply weakened the controlling authority of the SEC as regular of the Blue Chip market. This has also opened scope to indulge in malpractices such as embezzlement, fraud or cheating of the investors’ money. In turn, the share market failed to generate capital needed for the industry sector debarring upward movement of the economy as a whole.
In our view people responsible for such fraudulent activities must be brought to book soon opening criminal proceedings against them. The SEC’s should also strengthen its overseeing activities to detect such fraud to protect small investors from being robbed of their investment.
