According to the allegations, Khairul Hossain embezzled and laundered money through the process of low quality initial public offering (IPO) approval
The Anti-Corruption Commission (ACC) has launched an investigation into allegations of embezzlement and money laundering against securities market regulator Bangladesh Securities and Exchange Commission (BSEC) Chairman M Khairul Hossain.
According to the allegations, Khairul Hossain embezzled and laundered money through the process of low quality initial public offering (IPO) approval.
ACC's Assistant Director Mamunur Rashid Chowdhury has been assigned to investigate the allegations, an ACC top official has told Dhaka Tribune.
The Dhaka Stock Exchange’s benchmark index, the DSEX, lost more 600 points in the last three months while the market value of stocks dropped by about Tk30,000 crore.
Small stock investors have long been holding demonstrations against continued fall of the key indices at Dhaka and Chittagong Stock Exchanges.
During the protests, the aggrieved investors also demanded resignation of BSEC Chairman Kairul Hossain for what they called his failure to protect the investors’ rights.
During his eight-year tenure, 84 IPOs were approved and around half of them were alleged to be of low quality.
It was alleged that a good number of low quality firms resorting to malpractices often showed higher profitability in their annual financial statements while applying for IPO approvals to the securities regulator during the last eight years.
A section of BSEC senior officials knowing everything about fake and concocted statements of companies in question kept approving their IPOs, sometimes with higher premiums.
After getting listed, it was found that the earning per share (EPSs) of most of the firms started going downwards, suggesting their earlier earnings reports were either overestimated, or fake, an expert said.
The agitating investors said that lack of regulatory control over the stock market, ‘filthy’ IPO approval with huge amount of placement shares, relaxed punishment of fraudsters, manipulators and errant companies shattered investors’ trust and confidence.
Bangladesh Pujibazar Biniogkari Oikya Parishad president Mizan ur Rashid Chowdhury said: “The BSEC chairman is working for the issuer companies and stock brokers, not for the investors.”
M Khairul Hossain joined the BSEC as its chairman after stock market collapse in 2010. After completion of his first three-year tenure, the government appointed him chairman of the commission for the second tenure for four years as per Bangladesh Securities and Exchange Commission (Amendment) Act, 2012. Later, the government extended his tenure by two more years and he has been currently working as the chairman of the commission.
He is a professor at the Department of Finance at Dhaka University.