BSEC warns DSE MD

The securities regulator has warned the managing director of the Dhaka Stock Exchange (DSE) 'for not adopting a more cautious' approach in giving opinion regarding the transfer of the units of mutual funds, officials said.

The Bangladesh Securities and Exchange Commission (BSEC) issued a warning letter on June 9 last.

A BSEC official said the warning letter has been issued as the DSE sent a legal opinion instead of its clarification sought on the transfer of the substantial number of the units of two mutual funds.

He said the Substantial Acquisition Rules, 2002 will have to be complied with by an individual or a company if they intend to receive 10 per cent or more shares compared to total paid-up capital of that company.

The BSEC official said, recently the commission approved the sale of 39,490,401 units of Trust Bank 1st Mutual Fund and 9.0 million units LR Global Bangladesh Mutual Fund one to its subsidiary Trust Bank Investment.

"The BSEC sought a clarification from the DSE as the stakes of the subsidiary company stand to above 10 per cent of the paid-up capital of the mutual fund. But the DSE sent a legal opinion instead of any clarification and subsequently the premier bourse has been warned," said a BSEC official.

When asked, an official of the premier bourse has acknowledged that the regulator issued a warning letter to them for not adopting more cautious approach.

"The BSEC has the authority of accepting or rejecting any kind of opinion. But the regulator has mentioned the word--warning-- in the letter of giving consent for transfer of the units of the mutual fund. As a result, how is it possible for us to serve the letter to the company? The company will laugh with the DSE which works as a front line regulator," said a DSE official.

He also said the DSE sent legal opinion as the regulator asked for the legal ground of the transfer of the units of two mutual funds.

In the warning letter, the securities regulator has also said the Substantial Acquisition Rules will be applicable to the transfer of the shares of listed companies but not to the transfer of the units of mutual funds.