Regulator punishes stockbrokers for deficit in consular client account

The Bangladesh Securities and Exchange Commission (BSEC) has imposed several restrictions on errant stock brokers who maintain a deficit in the consular client account of their investors.

In a directive, the stock market regulator said it would not renew the securities brokers’ license until they had adjusted the deficit.

The BSEC imposed the restrictions on Tuesday to ensure the safety of investors’ money and securities and bring back discipline in the capital market.

According to the order, TREC holders will be barred from dividends on their shares held on the exchange until customer account shortages are addressed.

“The renewal of the approval of companies holding TRECs and their DP (depository participant) will remain suspended until they correct the shortcomings noted in the consolidated accounts of customers.” he added.

The facilities due to TREC holders offered within the framework of the IPO, the renewal of the public offering and the offer to qualified investors will also remain suspended if they fail to regularize the money and securities of their clients.

As eligible or accredited investors, stockbrokers benefit from a quota facility in an initial public offering.

Regulatory approval for the opening of new branches of brokerage firms was a long-standing request, he said.

In its order, the securities regulator said TREC holders will not be allowed to open new branches or digital booths if they fail to return investors’ money while adjusting security shortages.

The securities regulator said CDBL will keep errant TREC holders under special observation for a year after making up for shortages of money and securities from investors.

Recently, three DSE brokers – Tamha Securities, Crest Securities and Banco Securities – had embezzled huge sums of money and stocks from investors.

Several other brokers also maintained a deficit in their consolidated customer accounts.

Dolores W. Simon