Suspicious Fund Handling
BSEC probe finds LR Global caused losses to MFs
A Bangladesh Securities and Exchange Commission’s probe body on LR Global Bangladesh Asset Management Company’s suspicious bank transactions has found that the frequent fund transfer from the mutual funds’ one bank account to another resulted in heavy losses for the funds.
A BSEC senior official told New Age on Thursday that the investigation report had been submitted to the commission recently.
The official said, ‘The investigation committee on LR Global has established that the fund transfer from the mutual funds’ one bank
account to another account hampered the profitability of the funds managed by the asset management company.’
LR Global manages six mutual funds worth Tk 892 crore — DBH First Mutual Fund of Tk 120 crore, Green Delta Mutual Fund of Tk 150 crore, AIBL First Islamic Mutual Fund of Tk 100 crore, MBL First Mutual Fund of Tk 100 crore, LR Global Bangladesh Mutual Fund One of Tk 321 crore and NCCBL Mutual Fund-1 of Tk 110 crore. All of the funds are listed with the capital market.
The commission is also investigating a number of allegations of anomalies by LR Global including investment of Tk 46.39 crore in non-listed companies from the mutual funds run by LR Global in violation of rules.
‘In most of the cases, LR withdrew funds from a certain bank account of the mutual funds
before it became matured to get benefit or interest,’ the BSEC official said.
‘The motive is now clear that the fund transfer was conducted not to make the funds profitable rather than to fulfil any other intention,’ he said.
The probe committee report also showed ten transactions, for examples, that had resulted in losses for the mutual funds operated by the AMC.
Another BSEC official said that the commission might take tough action against LR Global Bangladesh Asset Management Company based on the report.
‘Despite repeated pressure from several influential persons of the government, the commission is moving ahead to take exemplary punishment against LR Global,’ he said.
The BSEC official also believes that exemplary punishment against the asset manager may help in reducing malpractices and increasing investors’ confidence over the mutual fund sector.
The commission in June this year launched a two-member probe committee setting five terms of references for the committee.
The TORs included inspecting transactions of mutual funds’ bank accounts which were opened in reference to the BSEC mutual fund rules, legality of the transactions, legality of investments, scrutinising the reason for the frequency of transactions and any further issue related to fund transfer.
LR Global operates several bank accounts for managing funds under its management with the aim of getting increased interest.
It frequently transferred fund from one bank to another before the stipulated date for getting
benefit without any reason, a BSEC initial report on LR Global had said.
Due to the frequent transactions, most of the mutual funds were deprived of interest income, it said.
-Input from New Age