The securities regulator has imposed penalties amounted to Tk 235.5 million on six individuals and a company for violation of rules.
Managing Director of Banco Finance and Investments Mohammad Hamdul Islam and his family members face the highest penalty because he allowed the others to hold shares of five companies that the merchant bank was the issue manager of.
As per the existing rules, the issue manager or any person whom it has links to can no way be connected with the issuer. Also, the issue manager or any person it has connection with cannot hold shares of the company.
Banco Finance and Investment managed IPOs of the companies and the Banco's managing director allowed his family members and relatives to hold more than 5.6 million placement shares of those companies, according to the Bangladesh Securities and Exchange Commission (BSEC).
The Banco Finance also provided margin facilities to the relatives of the MD in breach of the rules.
The BSEC slapped the fine in November after enquiries by its enforcement department and a hearing on the accusations.
The clarification of the Banco's MD Mohammad Hamdul Islam was not acceptable to the commission, and so it fined Mr Islam Tk 100 million.
Saiful Islam Helaly, brother of Mr. Islam, held more than 1.3 million shares of two companies that had deployed Banco as the issue manager for floating IPOs.
In an interview with the BSEC, Mr. Helaly said Tk 13.45 million spent for buying the shares had come from his job and investment in stocks. He also agreed to submit a certified copy of his tax return to the enquiry team.
But Mr Helaly did not submit the required documents. What he submitted were unauthenticated and irrelevant documents.
The securities regulator imposed a penalty of Tk 40 million on Mr. Helaly. The BSEC said the matter regarding the suspicious source of his money might be referred to the revenue board.
Mrs. Shahida Arabi, the wife of the Banco's MD, breached the rules by holding 0.52 million shares of one of the companies. She faces a penalty of Tk 20 million for failing to submit necessary documents to show the source of the money spent on purchasing the securities.
On the same grounds, Md. Abdus Sultan, the MD's father-in-law, will have to pay Tk 30 million.
The BSEC also fined Mrs. Hosne Ara Begum, sister of the Banco's managing director, Tk 30 million for not submitting documents showing the source of money used to buy shares.
Her husband Kazi Amdadul Hoque will also have to pay Tk 40 million in fine.
The securities regulator fined Alif Asset Management Company Tk 0.5 million for not complying with the provision of holding securities worth at least Tk 50 million as an issue manager.
Md. Jasim Uddin and his associates have been penalized for executing a series of transactions though the BO (beneficiary owner's) accounts opened with Eminent Securities.
The BSEC said the transactions had influenced the market price of Alltex Industries.
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