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Premier IPO scam
SEC finds evidence of forgery in BO account opening
FE Report
3/7/2005
The Securities and Exchange Commission (SEC) has found 'significant evidence of forgery' in opening of a large number of fake beneficiary owners' (BO) accounts in relation to the floatation of primary shares by the Premier Bank Ltd.
The opening of BO accounts with the Central Depository of Bangladesh Ltd. (CDBL) is mandatory for the people wanting to apply for primary shares.
The forgery in opening BO accounts was mentioned in an interim report prepared by a four-member probe committee of the SEC. The committee submitted the interim report Sunday with the Commission chairman.
According to sources, the SEC probe committee members visited some of the places of Chittagong themselves to find out the authenticity of the addresses of the BO account applicants.
"We failed to locate the persons at the addresses as mentioned in the applications for BO accounts at least at four places of Chittagong," one source of the SEC told this correspondent.
During interaction, residents of the localities as were furnished in the BO applications also failed to identify the BO account applicants.
As many as 15000 fake BO accounts were allegedly opened using different addresses.
Some 3300 BO accounts were opened using one particular address ---1364, Askarbagh, Doublemooring--- where the SEC officials found a garment factory.
"The garment factory people could not recognise anyone as showed in the BO account applications," the interim report revealed.
Another 565 false accounts were opened using another address at 7, Agrabad. The SEC probe body members also found a garment factory, which is owned by a director of a private commercial bank, there
"We, however, failed to contact him," the SEC source added.
In the last address of Chittagong, a total of 78 false BO accounts were found by investigators from the stock market regulatory body.
The address of 671-1, Sholakbahar also housed a garment factory owned by a member of Chittagong Stock Exchange (CSE), Abdul Hye.
"We talked with the concerned CSE member who said he had no knowledge about the incident of fake BO account opening," the SEC source pointed out.
The SEC in line with its preliminary findings has already asked the managing director of the Premier Bank Ltd to send particulars and photos of six officials of the bank to the office of the stock market regulatory body by today (Monday).
Subscription of the bank's IPO worth Tk 550 million was scheduled to begin on February 22 last but the SEC suspended the subscription process on February 12 on charge of massive irregularities in the share floatation process.
Meanwhile, the Securities and Exchange Commission (SEC) is planning to streamline the existing procedures of opening BO account to prevent forgery, official sources said.
A SEC consultative committee meeting has already recommended for plugging the existing loopholes in opening BO accounts to bring transparency in IPO application process.
The sources said the recent scam over opening of BO accounts by the Premier Bank has prompted the commission to tighten the existing BO account opening provisions.
There might be some changes in the present 16-digit BO accounts, they indicated.
The committee at the meeting also recommended for restoration of the Margin Rules 1999 that allows stockbrokers' credit margin provision with bourses brokerage houses and clients' credit margin with the brokers.
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