The Bangladesh Securities and Exchange Commission (BSEC) suspended several beneficiary owners (BO) accounts of Bangla-desh RACE Asset Management to protect the interest of unitholders of the mutual funds and shield them from mismanagement of assets.

RACE manages 10 closed-end mutual funds with holdings totalling approximately Tk 3,000 crore.

In an order issued yesterday, the stock market regulator said the asset manager opened and maintained BO accounts in different brokerage houses, namely Multi Securities, Smart Traders, and Trust Bank Securities for the mutual funds under its management.

This is a breach of rules as securities under mutual funds are supposed to be kept under the safe custody of the approved custodian of the respective mutual fund.

The rules were made to protect the interests of unitholders of mutual funds and shield them from mismanagement of assets and securities by the asset manager.

It is urgently required to review the role of the parties concerned with mutual funds, including trustees, custodians and asset managers, and see whether they were negligent in ensuring the safe custody of securities of the mutual funds, the BSEC said in the order.

In this regard, the regulator instructed the Central Depository Bangladesh Ltd, exchanges, trustees, custodians and asset managers to suspend those BO accounts which are not maintained with approved custodians of the respective mutual funds.

Each respective trustee of the mutual funds under the management of RACE shall take control of all the BO accounts opened and maintained with any stock broker in the name of the respective mutual funds under its trusteeship, the regulator said.

They will also have to report to the commission with detailed holding status within seven working days from the issuance of the order, it said.

Every custodian of the funds shall take steps to close the BO accounts opened and maintained in the broker houses in lieu of the custodian of the mutual fund.

They should also transfer all securities from the BO accounts in brokerage houses to the BO accounts maintained with the respective custodian within seven working days.

In the case of a failure to transfer the securities, any type of trading of securities in the name of the mutual fund shall be suspended till further instruction and the respective custodian and the trustee shall report to the commission within three days, the BSEC said.

Each concerned party of the mutual funds shall report to the commission in detail about their steps and compliance status under this order within 10 days, it said.