Bangladesh Securities and Exchange Commission (BSEC) has launched an investigation into the negative equity position of brokerage firm Mercantile Bank Securities.

The regulator has formed a three-member investigation committee to examine the number of negative equity accounts, clients’ outstanding loans, market value of shares held against those accounts and the adequacy of provisions maintained by the brokerage firm.

The investigation will also identify the actual beneficiaries of the accounts and examine the roles of the company’s board of directors and senior officials in creating the negative equity.

According to a recent order issued by BSEC’s Market Intelligence and Investigation Department, the committee has been instructed to complete the investigation and submit its report within 60 working days.

The committee comprises BSEC Additional Director Dr Mohammad Iqbal Hossain and Assistant Directors Mohammad Amirul Islam and Amit Adhikari.

The investigation will cover all negative equity accounts on a BO account basis. Investigators will examine when each account became negative, the amount of outstanding client loans, the market value of shares held against the accounts and the provisions maintained.

These details will be cross-checked against the company’s audited financial statements and information from the Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE) and Central Depository Bangladesh Limited (CDBL).

The committee will also investigate whether any share purchase orders were placed against negative equity accounts since November 13, 2025, and whether shares or funds were transferred through accounts belonging to related individuals, nominees or family members.

It will further examine whether the brokerage firm submitted statements every two months in compliance with BSEC directives.

Investigators will look into possible connections between the actual beneficiaries of the accounts and the company’s sponsors, directors, employees, merchant bankers, issuers or other intermediaries.

The probe will also assess whether portfolio management fees were collected or proposed against these accounts and whether the company’s proposal to restructure its portfolio on September 23 violated BSEC directives.

In addition, the committee will review clients’ margin agreements, know-your-customer (KYC) documents, margin calls, credit limit violations, forced share sales, board decisions and internal audit observations.