The Bangladesh Securities and Exchange Commission (BSEC) did not punish several investors although they were found to have breached rules by committing abnormal trades, according to an audit.

The Dhaka Stock Exchange (DSE) sent a probe report to the commission on the unusual share transaction that took place in the fiscal year of 2020-21 and recommended punishing the wrongdoers. The bourse also attached the documents naming 63 individuals and firms who were involved in the unusual trading of securities of 21 listed companies, which hurt general investors.

Three years have passed but the stock market regulator has not punished them yet, according to the audit report of the Office of the Comptroller and Auditor General (OCAG).

Even, no hearing took place in some cases, it said, adding that had the BSEC fined them, the amount would have been Tk 3.15 crore.

The OCAG is the supreme audit institution of Bangladesh responsible for auditing government receipts and public expenses and ascertaining whether expenditures have yielded value for money for government offices, public bodies, and statutory organisations.

Speaking about the missing of actions against the manipulators, the BSEC told the auditor that taking legal steps by the enforcement department of the commission was an ongoing process and took time.

The steps involved several phases, and it would take the measures soon, the BSEC said.

The OCAG, however, said the response is not supportive in settling the audit objections since the regulator had not moved to initiate steps despite passing more than three years in most cases.

"As a result, bringing discipline to the capital market, which is a sensitive place, is becoming difficult."

The OCAG found that the BSEC failed to collect fines of Tk 54.6 crore that was imposed on individuals and firms for violating securities rules. As a result, the amount has remained receivable for years.

In FY21, the BSEC fined several individuals and companies Tk 76.10 crore for flouting rules. Of the sum, Tk 21.5 crore was collected.

The accused gets six months to appeal the verdict after a penalty order is issued. If none appeals within the period or makes the payment, the documents are usually sent to the law department of the regulator for initiating further actions.

The OCAG also did not find the BSEC's explanation acceptable in settling the objections since no measure was taken after the deadline lapsed.

The audit report suggested intensive monitoring to collect fines.

The top audit body found the BSEC's liability in the embezzlement of Tk 207 crore by Banco Securities, Tamha Securities, and Firstlead Securities. Due to a lack of proper monitoring, the brokerage houses misappropriated the funds, it said.

Tamha Securities embezzled Tk 140 crore, Banco Securities stole Tk 67 crore, and Firstlead Securities swindled Tk 1 crore, according to an investigation of the DSE.

It was the BSEC's responsibility to monitor, audit and investigate what the intermediaries are doing, the OCAG observed, adding that the brokerage firms got the chance to embezzle investors' funds in the absence of constant monitoring and investigation.

The government lost Tk 48 lakh after the stock market regulator provided lunch bills to its officials by breaking rules, it also said.

The report said the BSEC provided a lunch subsidy of Tk 200 per day to all of its officials from the second grade to the 20th grade whereas the service rules permit such allowance for those belonging to the 11th grade to the 20th grade.

Replying, the commission said the salary, allowance and benefits of its officials may be set in line with the rates and benefits given to the officials of the Bangladesh Bank as per Service Rules, 2014. Therefore, the bill was given following a decision of the commission meeting.

The auditor said the service rules don't permit the bill and it can't be extended without securing approval from the finance ministry. So, the fund should be taken back, it added.

Yesterday, Mohammad Rezaul Karim, spokesperson of the BSEC, told The Daily Star that the commission had sent several responses to the OCAG on these issues. "We have no more reply."