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Dhaka Tribune

5 brokers fined on loan manipulation

Update : 18 Feb 2014, 06:23 PM

Bangladesh Securities and Exchange Commission (BSEC) yesterday took financial actions against five brokerage firms for margin loan manipulation.

The commission fined five brokerage firms Tk26 lakh – NBL Securities, Gateway Equity Resources, Transcon Securities, Khurshid Securities and Instant Watch Market Surveillance System – and Tk2 lakh an individual investor, according to a BSEC statement.

Margin loans are loans taken to finance the purchase of securities, usually the purchase of stock and normally are extended by the stock brokerage firm.

NBL Securities, a member of the Dhaka Stock Exchange (DSE), faced Tk3 lakh fine as it gave margin loan facility to its directors and clients, violating securities rules.

Gateway Equity, a DSE member, was fined Tk10 lakh for giving loan to non-marginable securities and issuing loan from its paid-up capital and retained earnings to its managing director Rezaul Karim.

A BSEC investigative team found that Karim invested more than Tk4 crore in stock market through his BO account, instead of dealer account, that were not included in the company’s financial statement ended on June 6, 2012.

In addition, this investment was also not found in its portfolio statement. “This means the brokerage firm gave loan to its managing director from its paid-up capital and retained earnings. This is clear violation of securities rules,” said the commission.     

The commission fined Tk5 lakh Transcon Securities, a DSE member, as it provided margin loan unlawfully to its directors and non-marginable securities.

Khurshid Securities, a DSE member, was fined Tk3 lakh for giving loan in cash instead of margin loan, taking above Tk5 lakh in cash from its clients and share short-selling.

Be Rich, member of the Chittagong Stock Exchange, was fined Tk5 lakh for giving margin loan to non-marginable securities JMI Syringes and Medical Devices Ltd whose price earnings (PE) ratio climbed 40. Issues having 20 PE is considered marginable securities.

Nyamul Kabir, one of clients of Be Rich, was fined Tk2 lakh as he failed to submit its share trading information to the commission. 

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