B Mirror Report: The Bangladesh Securities and Exchange Commission (BSEC) has recently formed an investigation committee to ensure transparency and legal compliance in the financial operations of LankaBangla Investments Limited. Allegations have surfaced that the company may have declared or distributed dividends despite having negative equity or realized losses in several of its accounts. Additionally, the committee has been asked to investigate within 60 working days claims of unusually high interest charges in certain accounts and lending in violation of margin rules.

The most controversial aspect of the investigation concerns the legitimacy of the “interest suspense” account. According to BSEC data, against a principal amount of only Tk 4.57 crore, a substantial Tk 17.09 crore has been recorded as suspended interest. However, there is no proper ledger support or reflection of this amount in audited financial statements. The commission believes that such undocumented figures may create confusion about whether this is genuine income, posing a significant risk to general investors.

The regulator has also expressed concern that approximately Tk 109.73 crore in interest payable to LankaBangla Finance Limited may not have been properly accounted for. This raises the possibility that the company’s profits and retained earnings have been artificially inflated. Furthermore, the investigation will examine whether the company failed to maintain necessary provisions or security reserves, despite having the opportunity to extend deadlines.

The probe will also assess whether accounts with negative equity were improperly used for share trading, IPO applications, or portfolio management. It will further determine whether margin accounts were operated without valid agreements or in breach of risk limits, and whether unlawful fees or interest were imposed on clients. The commission is also reviewing whether there was any negligence or lack of oversight by the board and senior management throughout these processes.

Established in 1997 as a subsidiary of LankaBangla Finance, this merchant bank is well-known in the country’s stock market. Although it has played a significant role in IPO management, bond issuance, and corporate advisory services, stakeholders believe that this investigation could have a major impact on the institution’s reputation and its investment banking operations.