LR Global turns to Competition Commission to continue managing two mutual funds

LR Global Bangladesh Asset Management Company has complained to the Bangladesh Competition Commission, accusing a peer company of price manipulation after allegations were dismissed by the stock market regulator.

LR Global is the asset manager of DBH First Mutual Fund and Green Delta Mutual Fund. Mutual funds are investment tools that pool a fixed amount of money from investors to be reinvested in stocks for a certain period of time.

The company claimed that some institutional investors, led by VIPB Asset Management Company, are involved in price manipulation of the two listed funds.

LR Global also alleged that VIPB is trying to remove it from the two funds by involving other fund managers.

The Bangladesh Competition Commission issued a press release in this regard yesterday, confirming that it received a complaint from LR Global against VIPB.

The company's lawyer presented the allegations on behalf of his client while the accused party asked for time to prepare for the hearing.

So, the hearing date has been set for December 9, the press release said.

"Our surveillance team investigated these allegations and found no sign of manipulation on how the funds were traded," said a top official of the Bangladesh Securities and Exchange Commission (BSEC) preferring anonymity.

If institutional investors want to remove the fund manager, they have the legal right to do so. Therefore, the removal of LR Global was approved.

LR Global had tried to have the stock market regulator's decision overturned last week, but the Supreme Court upheld the verdict, the BSEC official added.

The mutual funds' units were purchased over a prolonged period of three to five years by different institutions at market rates.

"So, there was no manipulation," said Shahidul Islam, managing director of VIPB.

Throughout this period, the funds were traded with a deep discount from face value, unlike many scrips that double or triple in months, he added.

In regards to the removal of LR Global, Islam said that they wanted to remove the asset manager while abiding by the law for the betterment of the funds.

The securities rules permit two-third unit-holders of a mutual fund to change its asset manager.

The BSEC approved the removal, and the Supreme Court upheld it, as it is permitted as per rules, Islam added.

"The issue should be resolved fast. Otherwise, unit-holders will be impacted by a potential drop in the funds' performance," said Abdur Rahim, an investor.

"As the asset management is a stock market-related issue, it should be solved by the BSEC," he added.