Written by The Banking Post
The market regulator has ordered a fresh, in-depth investigation into Shahjalal Equity Management over its role in the controversial IPO of ACME Pesticides, citing serious lapses in oversight.
The move by the Bangladesh Securities and Exchange Commission signals a tougher stance on accountability in the IPO process. Officials said the merchant bank could face cancellation of its licence depending on the findings, which are due within 30 working days.
Earlier investigations by the regulator uncovered that ACME Pesticides raised funds using fabricated financial statements, while the issue manager allegedly failed to flag the irregularities. Allegations include lack of due diligence and submission of misleading information in the IPO prospectus, in violation of securities laws.
The fresh probe will examine the firm’s financial position—including receivables, payables, assets, liabilities—and broader compliance gaps. A three-member committee has been formed to carry out the inquiry.
The regulator had already taken a “decision in principle” to revoke the merchant bank’s registration, pending confirmation of findings.
The case stems from a wider fraud involving placement shares. Investigators found that ACME Pesticides claimed to have raised Tk 1.2 billion through placement shares, but in reality, no funds were received. Despite this, the company reflected the amount in its financial statements, raising concerns of deliberate manipulation.
The regulator has referred the matter to the Anti-Corruption Commission for action against key individuals, while enforcement steps are also underway against the company’s auditor for failing to present an accurate financial picture.
Concerns extend beyond a single IPO. Shahjalal Equity also managed issues for other firms now under scrutiny, prompting broader regulatory action to tighten disclosure standards and restore investor confidence in the capital market.
