Investors Accuse BSEC Chairman of Embezzlement, Money Laundering
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The chairman of Bangladesh’s securities regulator is alleged to have approved IPOs for companies that falsified their financial statements to show higher profitability.
Bangladesh’s ACC (Anti-Corruption Commission) has reportedly opened a probe to investigate embezzlement and money laundering allegations against BSEC (Bangladesh Securities and Exchange Commission) chairman M Khairul Hossain.
Khairul – who has been BSEC’s chairman since May 2011 – is alleged to have embezzled and laundered money by approving low-quality IPOs.
Of the 84 IPOs that were approved during his eight-year tenure, around half of them are alleged to have been of low quality, where companies seeking a listing falsely showed higher profitability in their financial statements during the application process, only to see their earnings per share drop once they were listed.
According to a Dhaka Tribune report, senior BSEC officials approved the IPOs – sometimes with higher premiums – despite their knowledge that the financial statements had been falsified.
In the last three months, the DSE (Dhaka Stock Exchange) benchmark index, the DSEX, has lost more 600 points, while the stock market value has fallen by about BDT 300 billion (USD 3.6 billion).
As a result, aggrieved investors have held protests calling for the Kairul’s resignation, citing his failure to protect investors’ rights.
Investors have also been saying there is a lack of regulatory control over the stock market, a ‘filthy’ IPO approval process with a disproportionately large amount of placement shares, and overly relaxed enforcement against bad actors.
In light of the complaints, BSEC halted all new IPO applications on 30 April.
In response to the allegations, BSEC has issued a statement saying that Kairul does not himself approve IPOs; they are approved after the regulator’s relevant departments examine each IPO proposal.
BSEC also said the issuer, auditor, issue manager and credit rating companies are responsible for assessing companies’ financial statements, and the regulator itself does not examine the authenticity of any company’s IPO prospectus.
Source: https://www.regulationasia.com
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