Business Desk :
Due to a lack of supervision by the regulatory body and lack of market knowledge of the investors, various brokerage houses have been taking advantage to embezzle money year after year.
As many as three stockbrokers have recently embezzled investors’ money kept with them for share trading purposes, irking overall confidence level in the market.
The irregularities surfaced in June 2020 with Crest Securities for an amount of Tk48 crore while in June 2021 with Banco Securities for Tk66 crore and lately Tamha Securities for an initially estimated amount of Tk87 crore, according to sources at the Bangladesh Securities Exchange and Commission (BSEC).
Consistent and repetitive failure in the regulatory supervision over the stockbrokers have made small-scale investors deeply cautious, said an official working at a leading stock brokerage.
Sayadur Rahman, managing director of EBL Securities Limited said that “The regulatory committee is much more active than before. However, there are some legal weaknesses. That is why they may not be able to keep an eye on all the organizations. And small brokerage houses are taking advantage of this.”
However, he thinks that the lack of knowledge of investors is also a big reason behind this. “Our investors want more profit in less time,” he said.
“As a result, they invest without realizing it. And this benefit is taken by small organizations. However, the big companies are so far free from such allegations. So there is no alternative to increase supervision,” he added. Several new measures are already on the cards including a reporting of Risk-Based Capital Adequacy and limiting the number of customers consolidated bank accounts for each stock brokerage. Each stockbroker is to maintain separate customer consolidated bank accounts (CCA) to keep the idle money investors have in their respective BO accounts. However, industry experts hinted that the most basic compliance is to ensure the safety of the investors’ money in the customer consolidated bank accounts and we are failing to ensure the very basic. Shakil Rizvi, director of the Dhaka Stock Exchange (DSE) and also its former president, told that: “The issue of supervision is actually bigger than the legal weakness. We have therefore advised the DSEC to increase surveillance. Now it has to be reconciled every month.”
He also thinks that investors have a big responsibility in embezzling money from securities houses. He said: “Investors often do private transactions, which is often the case with the employees working in these organizations. So they (Investors) have no proof. Tama is a small company, but most of the complaints from the other two brokerage houses Banco and Crest were from those who did not have any papers. Therefore, in case of a transaction, it should be done through a BO account.”
Furthermore, a recently published report created a fresh round of dissatisfaction that alleged two leading stock brokerages were allowing investors to buy shares without depositing money in their beneficiary owner (BO) accounts.
