Govt to reconstruct SEC, says Muhith
Mohammad Mufazzal | Sunday, 17 April 2011
Mohammad Mufazzal
The government has planned to reconstitute the Securities and Exchange Commission (SEC) in the wake of a scathing report by a probe body that the regulator has failed to safeguard interest of millions of small investors. Finance Minister AMA Muhith said Saturday a move is underway to "reconstruct" the commission, which has been accused of incompetence and kowtowing to the interest of a group of powerful stock manipulators. "We are trying to reconstruct the SEC in any case," Mr. Muhith told the FE. He was replying to a query whether the government has any specific plan about the tainted and much criticised commission In a probe report last week, a committee led by ex-deputy governor of the central bank Khondker Ibrahim Khaled said the SEC was largely responsible for the recent stock market crash that wiped out investment of hundreds of thousands of small traders. It has asked the government to overhaul the commission, saying the market could face repeat of the debacle if the present regulator continues to work as the custodian of the country's stock market. The committee said the vested groups exerted so much power during the last few years that they simply ignored the legal orders of the regulator and influenced SEC regulations and orders. "The recent contribution of the SEC in giving legality to unlawful demand (of vested quarters) has tarnished its regulatory image very much," the probe report said. AHM Mustafa Kamal, the head of the key parliamentary body on the finance ministry, has backed the government plan to reform the commission, alleging the present SEC has lost legitimacy to work as the regulator of the country's capital market. Kamal has said almost every official of the securities regulator is involved in share transaction. "Who is going to uphold the interest of share traders if they (SEC officials) deal with share business?" he told the FE. Mr. Kamal said the securities regulator is vested with enough leverage to regulate the market and protect the investors' interest from any manipulation. "But it appears they have failed to carry out their duties properly." He stressed the need for reconstruction of the SEC and its complete separation from all other organs of the government. "It's a core responsibility of the government to rearrange the SEC. 'We do not want that the ministry concerned to intervene in the routine activities of the securities regulator. "The regulator must have enough power to implement its decisions without any pressure from any quarters. It has to act independently for the sake of market and the country's millions of investors." Kamal denied that his committee intervened directly in the affairs of the securities regulator. "We only discussed the proposals issued from the ministry of finance," he told the FE. Two former chiefs of securities regulator also stressed the need for complete independence of the SEC, saying the commission should have muscles to keep the vested quarters at bay. They said the government or other vested quarters including people close to the political power matrix should not try to interfere in their activities and the present commission should be no exception to this standard practice, as followed all over the world. "I never sought any approval regarding securities related issues from the ministry. I also hardly faced any undue pressure from any vested groups", ex-SEC chief and caretaker government advisor Mirza AB Azizul Islam said. He said, "In one or two cases politicians, businessmen, businessmen-cum-politicians sought to exert pressure on me for giving regulatory consent to their unlawful demand. But I did not pay heed to their request." He said it was "unfortunate" that the present commission has tarnished the image of one of the most important regulators. "A regulatory chief needs to be accountable to his duties. His main importance should be the ordinary investors." Another former SEC chairman Faruq Ahmed Siddiqi said he also acted free of any undue pressure during his tenure. "Nobody tried to interfere in the regulatory decisions when I was in the position. I had no relations with the ministry of finance. Only on some occasions I briefed the then finance minister and the advisor," Mr Siddiqi told the FE. He said it was beyond his imagination that a vested group would put pressure on the regulator and seek approval to their unlawful demand. "Even the government did not exert any pressure on me," he said. Professor Salahuddin Ahmed Khan, former chief executive officer of Dhaka Stock Exchange, said the days of Mirza AB Azizul Islam and Faruq Ahmed Siddiqi "were totally different from those of the incumbent high-ups in the SEC." "Nobody sought to interfere in the regulatory work during the tenures of the two former SEC chiefs. But different groups have been trying in the recent years to subject the regulator to pressure for getting undue benefits," he said. He also stated the government authorities in the relevant ministry and also the parliamentary standing committee concerned have been getting involved unnecessarily in the conduct of regulatory functions by the SEC. Mr Khan said, 'it's not the government's job to speak about any forthcoming IPO or other securities-related issues.' He said the government should rather help reduce the gap between the central bank and the SEC for the sake of stock market and investors. An SEC official who served both Mirza AB Azizul Islam and Faruq Ahmed Siddiqi echoed Khan, saying, "Nobody could enter the room of the two former SEC bosses to seek approval to unlawful and profit-oriented issues." "We operated without any phone calls from any pressure groups," he said, speaking on condition of anonymity. The probe body has recommended removing the tainted top officials of the SEC and making it more powerful. It suggested that the government form a high level search committee for appointing the SEC chairman and its members in future. SEC Chairman Ziaul Haque Khondker could not be reached for comment regarding the influence of pressure groups and the failure of the SEC in the recent stock market debacle. He has been avoiding the media since the submission of the probe body's report on April 7.
The government has planned to reconstitute the Securities and Exchange Commission (SEC) in the wake of a scathing report by a probe body that the regulator has failed to safeguard interest of millions of small investors. Finance Minister AMA Muhith said Saturday a move is underway to "reconstruct" the commission, which has been accused of incompetence and kowtowing to the interest of a group of powerful stock manipulators. "We are trying to reconstruct the SEC in any case," Mr. Muhith told the FE. He was replying to a query whether the government has any specific plan about the tainted and much criticised commission In a probe report last week, a committee led by ex-deputy governor of the central bank Khondker Ibrahim Khaled said the SEC was largely responsible for the recent stock market crash that wiped out investment of hundreds of thousands of small traders. It has asked the government to overhaul the commission, saying the market could face repeat of the debacle if the present regulator continues to work as the custodian of the country's stock market. The committee said the vested groups exerted so much power during the last few years that they simply ignored the legal orders of the regulator and influenced SEC regulations and orders. "The recent contribution of the SEC in giving legality to unlawful demand (of vested quarters) has tarnished its regulatory image very much," the probe report said. AHM Mustafa Kamal, the head of the key parliamentary body on the finance ministry, has backed the government plan to reform the commission, alleging the present SEC has lost legitimacy to work as the regulator of the country's capital market. Kamal has said almost every official of the securities regulator is involved in share transaction. "Who is going to uphold the interest of share traders if they (SEC officials) deal with share business?" he told the FE. Mr. Kamal said the securities regulator is vested with enough leverage to regulate the market and protect the investors' interest from any manipulation. "But it appears they have failed to carry out their duties properly." He stressed the need for reconstruction of the SEC and its complete separation from all other organs of the government. "It's a core responsibility of the government to rearrange the SEC. 'We do not want that the ministry concerned to intervene in the routine activities of the securities regulator. "The regulator must have enough power to implement its decisions without any pressure from any quarters. It has to act independently for the sake of market and the country's millions of investors." Kamal denied that his committee intervened directly in the affairs of the securities regulator. "We only discussed the proposals issued from the ministry of finance," he told the FE. Two former chiefs of securities regulator also stressed the need for complete independence of the SEC, saying the commission should have muscles to keep the vested quarters at bay. They said the government or other vested quarters including people close to the political power matrix should not try to interfere in their activities and the present commission should be no exception to this standard practice, as followed all over the world. "I never sought any approval regarding securities related issues from the ministry. I also hardly faced any undue pressure from any vested groups", ex-SEC chief and caretaker government advisor Mirza AB Azizul Islam said. He said, "In one or two cases politicians, businessmen, businessmen-cum-politicians sought to exert pressure on me for giving regulatory consent to their unlawful demand. But I did not pay heed to their request." He said it was "unfortunate" that the present commission has tarnished the image of one of the most important regulators. "A regulatory chief needs to be accountable to his duties. His main importance should be the ordinary investors." Another former SEC chairman Faruq Ahmed Siddiqi said he also acted free of any undue pressure during his tenure. "Nobody tried to interfere in the regulatory decisions when I was in the position. I had no relations with the ministry of finance. Only on some occasions I briefed the then finance minister and the advisor," Mr Siddiqi told the FE. He said it was beyond his imagination that a vested group would put pressure on the regulator and seek approval to their unlawful demand. "Even the government did not exert any pressure on me," he said. Professor Salahuddin Ahmed Khan, former chief executive officer of Dhaka Stock Exchange, said the days of Mirza AB Azizul Islam and Faruq Ahmed Siddiqi "were totally different from those of the incumbent high-ups in the SEC." "Nobody sought to interfere in the regulatory work during the tenures of the two former SEC chiefs. But different groups have been trying in the recent years to subject the regulator to pressure for getting undue benefits," he said. He also stated the government authorities in the relevant ministry and also the parliamentary standing committee concerned have been getting involved unnecessarily in the conduct of regulatory functions by the SEC. Mr Khan said, 'it's not the government's job to speak about any forthcoming IPO or other securities-related issues.' He said the government should rather help reduce the gap between the central bank and the SEC for the sake of stock market and investors. An SEC official who served both Mirza AB Azizul Islam and Faruq Ahmed Siddiqi echoed Khan, saying, "Nobody could enter the room of the two former SEC bosses to seek approval to unlawful and profit-oriented issues." "We operated without any phone calls from any pressure groups," he said, speaking on condition of anonymity. The probe body has recommended removing the tainted top officials of the SEC and making it more powerful. It suggested that the government form a high level search committee for appointing the SEC chairman and its members in future. SEC Chairman Ziaul Haque Khondker could not be reached for comment regarding the influence of pressure groups and the failure of the SEC in the recent stock market debacle. He has been avoiding the media since the submission of the probe body's report on April 7.