The stock market regulator has slammed a fine worth Tk 100,000 on Snigdha Equities for violating three margin related rules.
The Bangladesh Securities and Exchange Commission (BSEC) made the regulatory decision public for July this year through its website on Thursday.
It conducted an investigation in October last year and found that Snigdha Equities provided margin loans to the company chief executive officer, mother of an authorized representative, and seven other clients worth Tk 4.93 million in total in breach of the securities rules.
Snigdha Equities, one of the new TREC (trading right entitlement certificates) holders of the Dhaka Stock Exchange, provided margin loans of Tk 4.53 million to Arafat Jahan Biplob, CEO of the brokerage house.
But, according to a directive issued by BSEC, brokerage houses shall not provide margin facilities to any member of the board of directors of its own company, officers and staff and management, their parents, spouse, son, daughter, sister, brother, son-in-law, daughter-in-law and other relatives.
The BSEC investigative team also found that Snigdha Equities had lent money to Hosne Ara Begum, mother of Sarwar Morshad.
Mr. Morshad is the authorized representative of the brokerage house. So, providing margin facilities to his mother is also a violation of securities rules. Snigdha Equities has also provided margin loans to seven other clients without any agreement.
According to law, margin loans without agreement are also prohibited.
Arafat Jahan Biplob, CEO of Snigdha Equities, acknowledged that they breached relevant rules and told the commission that they were unaware about the laws as the brokerage house was new in business.
They also apologized for what they had done.
Snigdha Equities received TREC licence in January 2022.
"We have done some wrongs for our ignorance and lack of knowledge. We are extremely sorry for that and beg our pardon for providing credit facilities. That happened due to our shortage of knowledge and ignorance," said Mr Biplop.
The regulator asked Snigdha Equity to deposit fines within 30 working days. Otherwise, the regulator will take punitive actions as per the securities rules.
Meanwhile, the securities regulator fined 75 individual investors and institutions (listed companies and intermediaries) in the immediate past FY24 on charges of violating securities laws and manipulating shares.
These actions, including imposition of fines amounting to Tk 261.2 million in total, are aimed at strengthening good governance in the market, according to the BSEC.
farhan.fardaus@gmail.com