FE Report (March 21, 2011)
Finance Minister AMA Muhith has backed the move to empower the securities regulator for issuing bank search orders against any suspected listed companies or individual investors, but underlined a broad base consensus with stakeholders before a final decision to this effect, official sources said.
The go-slow stand of Muhith on the proposed amendment to Securities and Exchange Ordinance, 1969, meant for providing the SEC with the authority to ask banks and financial institutions for bank transaction statements, is due to avert any possible setback afresh in the capital market, a top official in the finance ministry said.
"The minister is supportive to the move of the Securities and Exchange Commission (SEC) in amending the Ordinance but remains extra careful of any negative consequences that may take place after bringing changes in the existing regulations," the official said.
"We will ask the SEC to hold discussion with stakeholders, particularly involving the representatives of big listed companies and sector wise leaders in the share market for their opinions on the proposed move," he added.
Muhith also asked his ministry to seek opinion on the particular issue from probe committee on stock market, formed on January 25, to unearth the irregularities in recent share market scam.
The SEC has recently decided to go for searching bank accounts of companies and individuals to probe into the alleged irregularities in their transactions relating to capital market activities.
The decision of the securities regulator, taken at a Commission meeting, was placed to Muhith for approval.
The securities regulator proposed that any probe committee, to be formed by SEC, can also ask banks, financial institutions and insurance companies to furnish all relevant information and details of their transactions concerning companies and individuals in question.
"The proposed measure will empower SEC as it seldom gets satisfactory findings from probe committees, formed from time to time to unearth the alleged misdeeds on the part of any individual or investor, because of non-cooperation from commercial banks," a top SEC official told the FE, preferring anonymity.
Officials in the SEC said, under the provisions of the existing Securities and Exchange Ordinance, 1969, banks and other financial institutions are not law-bound to furnish information to any probe committee, constituted by the SEC.
As a result, the securities regulator cannot issue any search order to the bank or ask banking companies and financial institutions to provide full reports concerning financial transactions of companies or investors against whom allegations are made or suspicions arise, they added.
Only the institutions and individuals like stock exchanges, stock brokers, directors, listed companies, stock members, auditors and issuers are duty-bound to give the required information to be sought by any SEC probe committee, according to section (2) under clause 21 of the Ordinance.
"The manipulators in the stock market do hardly bear the brunt of any action from SEC as the commission cannot prove financial transactions of suspected companies and individuals for lack of proper evidence," another senior SEC official said.
Currently National Board of Revenue (NBR) and Bangladesh Bank (BB) enjoy the privilege of issuing bank search orders.
When asked, a top banker of a private bank said the confidence of bank depositors, who are also investors in the stock market, would be impaired if the proposed measure is endorsed by the government.
The proposed amendment also allowed Trust organizations and other government -owned companies formed by particular law but not under the Company Act, could collect fund from the capital market, which is barred under the existing Ordinance.
Furthermore, it proposed to increase the tenure of trade suspension of a company at fault from existing 28 days to three months.
"We will hold extensive discussion with different stakeholders on the entire issues that have been proposed by the SEC before approving the same to place in the Cabinet Division given the gravity and sensitivity of the move," another MoF official said.
The go-slow stand of Muhith on the proposed amendment to Securities and Exchange Ordinance, 1969, meant for providing the SEC with the authority to ask banks and financial institutions for bank transaction statements, is due to avert any possible setback afresh in the capital market, a top official in the finance ministry said.
"The minister is supportive to the move of the Securities and Exchange Commission (SEC) in amending the Ordinance but remains extra careful of any negative consequences that may take place after bringing changes in the existing regulations," the official said.
"We will ask the SEC to hold discussion with stakeholders, particularly involving the representatives of big listed companies and sector wise leaders in the share market for their opinions on the proposed move," he added.
Muhith also asked his ministry to seek opinion on the particular issue from probe committee on stock market, formed on January 25, to unearth the irregularities in recent share market scam.
The SEC has recently decided to go for searching bank accounts of companies and individuals to probe into the alleged irregularities in their transactions relating to capital market activities.
The decision of the securities regulator, taken at a Commission meeting, was placed to Muhith for approval.
The securities regulator proposed that any probe committee, to be formed by SEC, can also ask banks, financial institutions and insurance companies to furnish all relevant information and details of their transactions concerning companies and individuals in question.
"The proposed measure will empower SEC as it seldom gets satisfactory findings from probe committees, formed from time to time to unearth the alleged misdeeds on the part of any individual or investor, because of non-cooperation from commercial banks," a top SEC official told the FE, preferring anonymity.
Officials in the SEC said, under the provisions of the existing Securities and Exchange Ordinance, 1969, banks and other financial institutions are not law-bound to furnish information to any probe committee, constituted by the SEC.
As a result, the securities regulator cannot issue any search order to the bank or ask banking companies and financial institutions to provide full reports concerning financial transactions of companies or investors against whom allegations are made or suspicions arise, they added.
Only the institutions and individuals like stock exchanges, stock brokers, directors, listed companies, stock members, auditors and issuers are duty-bound to give the required information to be sought by any SEC probe committee, according to section (2) under clause 21 of the Ordinance.
"The manipulators in the stock market do hardly bear the brunt of any action from SEC as the commission cannot prove financial transactions of suspected companies and individuals for lack of proper evidence," another senior SEC official said.
Currently National Board of Revenue (NBR) and Bangladesh Bank (BB) enjoy the privilege of issuing bank search orders.
When asked, a top banker of a private bank said the confidence of bank depositors, who are also investors in the stock market, would be impaired if the proposed measure is endorsed by the government.
The proposed amendment also allowed Trust organizations and other government -owned companies formed by particular law but not under the Company Act, could collect fund from the capital market, which is barred under the existing Ordinance.
Furthermore, it proposed to increase the tenure of trade suspension of a company at fault from existing 28 days to three months.
"We will hold extensive discussion with different stakeholders on the entire issues that have been proposed by the SEC before approving the same to place in the Cabinet Division given the gravity and sensitivity of the move," another MoF official said.
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