The securities market regulator has 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.
Search orders will be issued to the scheduled banks of the companies by Securities and Exchange Commission (SEC), the official sources said.
Any probe committee, to be formed by Securities and Exchange Commission (SEC), can also ask financial institutions and insurance companies to furnish all relevant information concerning of companies and individuals in question.
The approval has been given at a recent meeting of the Commission. SEC Chairman Ziaul Haque Khondker presided over it.
The proposed measures, aimed to address the share market scam, have been placed to Ministry of Finance (MoF) for final approval.
"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.
He said the MoF has already indicated about its 'green signal' about to empowering the securities market regulator in line with the decision of the Commission meeting.
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.
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 top SEC official said.
He said International Organisation of Securities Commissions, which has 115 members including Bangladesh, has long been pressing the SEC to exercise the right of bank search orders in order to attain the status of a globally recognised securities regulator.
A top official in the MoF said, currently National Board of Revenue (NBR) and Bangladesh Bank (BB) enjoy the privilege of issuing bank search orders.
Awarding SEC with the similar power will certainly need approval by the cabinet, he added.
The official concerned, however, said, Finance Minister AMA Muhith at a recent meeting has showed his willingness to empower the SEC with bank search order as the role of regulator is now critically important for proper enforcement of regulatory powers.
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.
He said excepting the BB, no government entity should be given the power of issuing bank search order to help curb capital flight from the country, which has been in practice.
The meeting of the SEC has also approved a number of measures relating to issuing shares and debentures by companies, which are not registered under the Companies Act, a source said.
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