Written by The Banking Post
The Bangladesh Securities and Exchange Commission (BSEC) has imposed a lifetime ban on Reaz Islam, Chief Executive Officer of LR Global Bangladesh Asset Management Company, for making an unlawful investment in a loss-making firm using money from six mutual funds under the company’s management.
At a meeting chaired by BSEC Chairman Khondoker Rashed Maqsood on Tuesday, the regulator also directed the asset manager to recover Tk900 million, including interest, from the investment within 30 working days.
According to the BSEC, LR Global invested Tk686.4 million in Padma Printers & Colour in 2022, acquiring a 51 per cent stake despite the company being listed in the over-the-counter (OTC) market and reporting losses at the time.
Funds for the investment were drawn from six mutual funds — DBH First Mutual Fund, Green Delta Mutual Fund, AIBL 1st Islamic Mutual Fund, LR Global Bangladesh Mutual Fund One, NCCBL MF-1, and MBL First Mutual Fund — a move that violated securities regulations.
Following the acquisition, LR Global restructured the company’s board, renamed it Quest BDC Ltd, and increased its paid-up capital from Tk16 million to Tk500 million through a private placement — without holding an extraordinary general meeting or disclosing price-sensitive information.
Penalties and recovery order
Besides the lifetime ban on Reaz Islam, the BSEC fined six top officials — Rezaur Rahman Shoag, Brig Gen Sharif Ahsan, Madina Ali, Syed Kamrul Huda, and Md Omar Soeb Chowdhury — Tk10 million each for their roles in the misconduct.
The regulator warned that if the Tk900 million investment is not retrieved within 30 working days, the CEO will face an additional Tk980 million penalty, while LR Global directors George M. Stock III and Rezaur Rahman Sohag Monowar will be fined Tk10 million each.
The Bangladesh General Insurance Company, trustee of the involved mutual funds, will also be fined Tk30 million, the BSEC statement said.
