AHSAN HABIB
Stock brokerage firm Salta Capital Limited has been accused of embezzling around Tk 100 crore in client funds and shares, according to an investigation by the Bangladesh Securities and Exchange Commission (BSEC).
The firm withdrew about Tk 27 crore from its consolidated customer account (CCA). It also embezzled another Tk 72 crore by selling shares from customers’ BO (beneficial owner) accounts, according to BSEC officials familiar with the investigation.
The stock market regulator is now preparing legal action against the brokerage house, the officials said. However, Salta Capital’s managing director and chief executive officer have gone into hiding.
Salta Capital is a member of both the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE). It has nearly 14,000 customers. The DSE is currently assessing how many clients have been affected and the extent of their losses.
Although similar incidents of embezzlement of client funds and shares have occurred in the past, market participants say the regulator has failed to take sufficient action.
According to officials involved in the investigation, Salta Capital used multiple fake versions of back-office software to carry out the fraud.
They said the brokerage house showed one set of data to the stock exchanges while using another version of the software to mislead customers. As a result, the money and share balances customers saw in their BO accounts were entirely fictitious.
According to BSEC officials, outdated mobile phone numbers and email addresses of many customers were among the factors that also allowed the irregularities to go unnoticed.
In February this year, the DSE conducted an initial investigation after detecting the irregularities and submitted a report to the BSEC. The regulator later carried out the full investigation.
Md Abul Kalam, spokesperson for the BSEC, said the regulator is proceeding with legal action.
“All BO accounts and bank accounts of the directors of this brokerage house have already been frozen,” he said.