BSEC slaps fine on Fareast Finance chairman, director

The stock market regulator yesterday slapped a fine on the chairman and a director of Fareast Finance for selling shares without any prior notice.

The Bangladesh Securities and Exchange Commission (BSEC) penalised three brokerage houses for breaching rules and halted the auditing rights of a chartered accounting firm as it did not publish the breach of regulations by two listed companies.

The decision came at a meeting presided over by Prof Shibli Rubayet Ul Islam, chairman of the commission.

Fareast Finance Chairman MA Khaleque and Director Rubaiyat Khaled sold 32.81 lakh and 26,777 shares respectively during a prohibited period and without giving any notice in advance, said the BSEC in a press release.

This is a breach of listing regulations as directors are compelled to give an announcement before selling or buying shares.

"They also did not pay taxes properly on the shares sold," the statement said.

So, the BSEC has decided to impose a fine of Tk 10 lakh on Khaleque and Tk 5 lakh on Khaled. Until the fines are paid, their beneficiary owner's accounts would remain frozen.

The BSEC found that Sylnet Securities, Modern Securities and MAH Securities broke rules.

Keeping a deficit in consolidated customer's accounts, giving loan facilities to their staff and allowing margin loans to buy junk shares are among the breaches committed by the stockbrokers, according to the BSEC. They were fined Tk 2 lakh, 5 lakh and Tk 1 lakh respectively.

The commission halted the auditing rights of Atik Khaled Chowdhury Chartered Accountants for three years as it did not disclose in its audit report that RN Spinning Mills and ML Dyeing spent Tk 45.46 crore and Tk 53 crore respectively to buy assets in cash, a breach of rules.

The regulator also approved bonds of Al-Arafah Islami Bank and Pran Agro.

Al-Arafah Islami Bank would issue non-convertible, floating rate, mudaraba subordinated tier-2 capital bonds to raise Tk 500 crore.

The bonds' tenure is seven years and they would be issued to institutional investors and eligible investors through private placement. The face value would be Tk 5 lakh.

Pran Agro would issue a fully redeemable, non-convertible unsecured corporate guaranteed bond worth Tk 210 crore. Its coupon rate is 8 to 10 per cent and it would be redeemed within seven years.

The coupon rate is the rate of interest the bond issuer will pay on the face value of the bond, expressed as a percentage.

At least 80 per cent of the bonds would be issued to Metlife Bangladesh and the rest to institutional investors and eligible investors.

The face value is Tk 10 lakh.