B Mirror Report : Brokerage firm Island Securities Limited is facing regulatory sanctions after an investigation by the Bangladesh Securities and Exchange Commission (BSEC) found evidence that client funds were withdrawn without authorization and used to purchase placement shares of GMG Airlines.
According to a report by BSEC’s Enforcement Department, client Md. Golam Rahman filed a written complaint with the Dhaka Stock Exchange (DSE) on July 29, 2025, alleging that Tk 1.22 million had been withdrawn from his Beneficiary Owner (BO) account without his knowledge on April 15, 2010. The funds had reportedly been deposited for purchasing shares in the secondary market.
The complainant stated that despite repeated verbal and written requests over the years, the brokerage firm failed to resolve the issue. He submitted formal complaints to Island Securities on January 17, February 29, and April 10, 2016, but received no satisfactory response.
Island Securities has consistently denied wrongdoing, claiming that the funds were used to purchase GMG Airlines placement shares based on the client’s verbal instructions. The firm argued that GMG Airlines placement shares were in high demand at the time and that the client had expressed interest in acquiring them.
However, BSEC’s investigation found that the brokerage could not provide any written authorization, requisition slip, or supporting documentation to justify the withdrawal of funds from the client’s account. During a tripartite meeting held at the DSE on August 17, 2025, Island Securities reportedly acknowledged that it did not possess any written consent from the client for the transaction.
The regulator also noted that the brokerage failed to address the client’s complaint in a timely manner and demonstrated deficiencies in fund management, record-keeping, and the provision of credible supporting information during the investigation.
Based on its findings, BSEC concluded that Island Securities violated several provisions of the Securities and Exchange Ordinance, 1969, as well as regulations governing stock dealers, stock brokers, and authorized representatives. The violations include the unauthorized transfer of client funds and failure to properly handle investor complaints.
As a result, on May 12, BSEC ordered Island Securities to return the full Tk 1.22 million to the client within 30 days. If the brokerage fails to comply within the stipulated period, it will be required to pay a Tk 2 million fine to the commission.
The regulator warned that further legal action could be taken if the penalty is not paid through a bank draft or pay order in favor of BSEC.
