The world of Bangladesh stock market has never been perfect and it is unlikely to be so within the foreseeable future. Two scams of gigantic proportion jolting the market with an interlude of 14 years, have not apparently been enough to keep the securities' regulator and all others concerned adequately alert to stop recurrence of any more scams. That is why another scam involving an asset management company (AMC) and, at least, six mutual funds (MFs), managed and operated by it, has just been unearthed. The AMC in question, in total breach of the mutual funds rules of 2001, has diverted a large volume of resources belonging to MFs under its management control and invested the same in phony companies and entities.
A section of the directors of the errant AMC that manages six mutual funds, having an aggregate worth of about Tk 9.0 billion, allegedly floated a number of fake companies and took out a sum of about Tk.464 million, from the funds and invested the same in those companies. All these exercises were accomplished with a view to gobbling up of a part of the money invested by thousands of people in those six MFs. The AMCs are professional bodies that are entrusted with the responsibilities of managing the portfolios of the MFs in exchange for management fees and disbursing the profits in the form of dividends among the sponsors and the investors. The AMCs are required to make investment of MFs' money in both equities and money market instruments in accordance with the guidelines prepared by the securities, regulator, the Bangladesh Securities and Exchange Commission (BSEC).
The BSEC has already concluded an investigation into the operation of the AMC in question and detected widespread anomalies in the management of the portfolios of the MFs under its control. The investors who are now facing the risk of losing a part of their investment may raise a question as to whether the regulator's move was belated one or not. They might also seek to know the role of the trustees concerned who are supposed to keep a track on the activities of the AMCs. Undeniably, there were serious lapses on the part of all the parties concerned to monitor the operations of the AMC involved in the management of all the six MFs.
It should also be their responsibility to devise appropriate means to get back the investors' money. The investment in MFs is considered relatively safe because of the expertise employed by the AMCs. However, the AMCs can, at times, make wrong decisions in the matters of investments. But diversion of funds with an ill-motive of gobbling it up is done very rarely. The latest incident would be yet another addition to the factors that have made the Bangladesh stock market infamous and risky.
Besides, it would, to a large extent, retard the process of regaining the investors' confidence in the market. The 'plunder' of MFs' money does also indicate that the BSEC and relevant others have not been alert against the malfeasance on the part so-called professionals. However, they could now compensate for their failure by taking tough and prompt actions against the wrong-doers and try to regain their credibility, if there is any. Furthermore, the BSEC should look into the state of affairs with other mutual funds and also about the track record of the sponsors of the AMCs now in operation.
Ensuring proper operation of asset management companies
FE Team | Published: July 27, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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