BM Desk : The Bangladesh Securities and Exchange Commission (BSEC) has imposed fines totaling Tk 92.1 million on nine individuals and institutions for the illegal use of mutual fund assets, including unauthorized investments in loss-making and delisted companies. Among the penalized are LR Global Bangladesh Asset Management Company CEO Riaz Islam and six directors, each fined Tk 10 million, amounting to Tk 60 million. BSEC has also permanently banned Riaz Islam and former BSEC Chairman Professor Shibli Rubayat-Ul-Islam from all capital market activities due to their involvement in serious financial irregularities.

The penalties were announced following BSEC’s 978th commission meeting held on October 21, chaired by BSEC Chairman Khandaker Rashid Maksud. The commission found that LR Global had invested over Tk 236.2 million from six mutual funds in Padma Printers & Color Ltd (now Quest BDC Ltd), a company that had been delisted from the stock exchange. Alarmingly, shares were purchased at Tk 289.48 each, despite a face value of Tk 10, negative NAV of Tk 2.74, and no ongoing business activity—while the market price on the OTC platform was just Tk 13.60.

As this violated mutual fund regulations and harmed investor interests, BSEC ordered the full recovery of Tk 906 million (including interest) within 30 days. If not returned, Riaz Islam could face an additional fine of Tk 980 million, with other directors also facing further penalties. BSEC has also initiated the process to remove LR Global from its role as asset manager for the affected funds.

In related actions, six former directors of Quest BDC Ltd were each fined Tk 10 million for violating securities laws, including failure to disclose price-sensitive information and hold required shareholder meetings. Bangladesh General Insurance Company Ltd (BGIC) was fined Tk 30 million for failing to properly oversee fund operations. Additional fines include Tk 1 million on Rezaur Rahman Sohag for providing false information, and Tk 100,000 on Brigadier General (Retd.) Sharif Ahsan for conflict of interest.

Furthermore, an investment of Tk 249.5 million by Quest BDC Ltd in Thyrocare Bangladesh Ltd—at an inflated price of Tk 52.25 per share was allegedly arranged through collusion between Riaz Islam and then MD Ershad Hossain, indicating potential money laundering. This matter has been referred to the Anti-Corruption Commission (ACC) for further investigation. BSEC has also forwarded concerns to the Financial Reporting Council (FRC) regarding negligence in the FY2023 audit of Quest BDC, conducted by Shafique Basak & Co., Chartered Accountants.

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