The Bangladesh Securities and Exchange Commission (BSEC) has taken strict action against asset management company RACE Asset Management PLC for failing to make mandatory investments in listed bonds and government treasury bonds. The company has been fined a total of Tk 5.5 million for violating multiple laws and directives.

Details of the action were published in a recent order on the BSEC website.

Funds managed by RACE Asset Management include Exim Bank First Mutual Fund, IFIC Bank First Mutual Fund, Trust Bank First Mutual Fund, EBL First Mutual Fund, First Bangladesh Mutual Fund, First Janata Bank Mutual Fund, AB Bank First Mutual Fund, EBL NRB Mutual Fund, PHP First Mutual Fund, Popular Life First Mutual Fund, and RACE Financial Inclusion Unit Fund.

According to the order, a fine of Tk 500,000 has been imposed on each of the 11 funds managed by RACE for breaching securities laws and regulations in fund management, totaling Tk 5.5 million. The company has been instructed to pay the fine within 30 days, failing which legal action will be taken.

Sources said that under existing rules, each mutual fund is required to invest at least 3 percent of its portfolio in listed debt securities and 1 percent in government treasury bonds. However, RACE failed to comply with this requirement over a long period.

Although a directive issued on May 23, 2021 required compliance by June 2022—later extended to June 2023 a review as of June 30, 2025 found that most of the funds had still not met the 3 percent investment requirement.

Additionally, a directive dated February 19, 2023 instructed all market intermediaries to invest at least 1 percent of their own portfolios in treasury bonds. However, none of the funds managed by RACE implemented this instruction.

Meanwhile, trustees of six mutual funds Investment Corporation of Bangladesh (ICB)—repeatedly urged compliance in multiple trustee committee meetings during the 2024–25 fiscal year, but RACE did not follow through. Similarly, the trustee of four funds, Bangladesh General Insurance Company Limited (BGIC), also flagged the issue as irregular multiple times, but no corrective action was taken.

Market insiders believe that BSEC’s decision sends a strong message, and it is expected to encourage other asset management companies to comply more strictly with laws and regulations in the future.