The Bangladesh Securities and Exchange Commission (BSEC) has banned Banco Finance and Investment Limited Managing Director Mohammad Hamdul Islam from the stock market for five years and fined him and his family members Tk26 crore for enjoying undue privileges.
Hamdul Islam's relatives will not be able to withdraw money from their beneficiary owner (BO) accounts and transfer shares until the penalty is paid in full, according to a recent decision made by the market regulator.
BSEC Executive Director and spokesperson Mohammad Rezaul Karim told The Business Standard, "No order has been issued in this regard yet. So I cannot tell you the details."
According to BSEC sources, Hamdul Islam took advantage of several companies where he played the role of issue manager.
He held the pre-IPO shares of all those companies against the names of his relatives and his wife. Besides, he did not cooperate with an enquiry committee formed by the commission.
Earlier in 2014, a chief executive officer of an investment bank, Kazi Saifur Rahman, was banned from all activities of the stock market for five years and fined Tk10 lakh after the BSEC found his involvement in share manipulation of Tallu Spinning Mills Ltd and Bangas Limited.
Seeking anonymity, officials at BSEC said Hamdul Islam has been fined Tk10 crore and his brother-in-law Kazi Emdadul Haque Tk4 crore.
Besides, Hamdul's sister Husne Ara Begum was fined Tk3 crore, his father-in-law Abdus Sultan Tk3 crore, his brother Saiful Islam Tk4 crore, and his wife Shahida Arabi Tk2 crore.
These relatives did not come up with any kind of cooperation or information before the enquiry committee, according to commission sources.
How many shares did Hamdul buy?
BSEC investigators found that Hamdul Islam held around 34.49 lakh pre-IPO shares of different companies, where his firm was the issue manager, in the name of his relatives and his wife and earned profits in violation of Public Issue Rules.
Of them, Hamdul's relatives held 5.20 lakh shares in Nahee Aluminum Composite Panel, 10 lakh in BBS Cables, 2 lakh in Sea Pearl Beach Resort and 17.29 lakh shares in Three Angle Marine.
Hamdul's wife Shahida Arabi bought 5.2 lakh shares of Nahee Aluminum Composite.
His father-in-law Abdus Sultan took 4 lakh shares in BBS Cables, his brother-in-law Kazi Emdadul Haque bought Tk3 lakh shares, and his brother Saiful Islam took 3 lakh shares in the company.
Abdus Sultan also bought 2 lakh shares of Sea Pearl Resort.
In Three Angle Marine, Hamdul's sister took 4.62 lakh shares, his brother-in-law bought 6.5 lakh shares and his father-in-law took 6.62 lakh shares.
Under Public Issue Rules, the issue manager or his affiliates cannot hold pre-IPO shares in any way. Hamdul Islam is reported to have broken the rules.
Speaking to The Business Standard, Hamdul Islam said, "I have been punished unfairly. I did not get justice".
He said that he has not yet received any letter in this regard.
In June last year, Banco Securities, which had common directors with Banco Finance, was shut down due to irregularities and corruption.
According to the BSEC enquiry, the owners of the brokerage house embezzled Tk66.59 crore from its clients.