The Bangladesh Securities and Exchange Commission has warned ICB Asset Management Company Limited for its attempt to embezzle Tk 50 crore from the Bangladesh Fund.
ICB AMCL unlawfully charged the stock market stabilisation fund Tk 75 crore as its formation fee at the rate of 1.50 per cent on the targeted size of the fund — Tk 5,000 crore, the fund’s audited financial statement for the year ended on June 30, 2013 showed.
As per mutual fund rules, the formation fee for a mutual fund will be 1.50 per cent on the amount collected not on the amount targeted.
At that rate formation charge on the Bangladesh Fund stands at Tk 24.61 crore as the fund has so far collected Tk 1,641 crore, BSEC sources said.
ICB AMCL, a subsidiary of the Investment Corporation of Bangladesh, and the asset manager of the Bangladesh Fund, charged the fund around Tk 88 crore or 5.38 per cent of the fund as its initial issue expenses including formation fee, violating rules.
As per the rules, any asset manager can charge up to 5 per cent (including formation charge at 1.5 per cent) of the amount collected by a fund as initial issue expenses charge.
ICB officials said that the formation charge was calculated as per the BSEC-approved trust deed of the fund.
BSEC officials, however, said that a hurried approval to the fund to restore investors’ confidence over the market after the market crash might result in such mistake.
But, securities law will always prevail if it contradicts with the trust deed approved by the commission, they said.
They also alleged that as the trust deed and all the other documents were approved hurriedly, that’s why it was intentionally added by ICB AMCL that formation fee could be charged on the target size of the fund.
‘I am yet to be aware of such incident. ICB and its subsidiaries always comply with rules and regulations. That’s why there is no scope for such activities,’ ICB managing director Md Faykuzzaman told New Age on Thursday.
On the other hand, as the ICB and its subsidiaries are state-owned, that’s why there is no reason for such move by ICB AMCL, said Faykuzzaman.
The BSEC has also asked ICB AMCL to follow rules in preparing the Bangladesh Fund’s next fiscal year’s statement.
The Bangladesh Fund, which was announced by the government in 2011 to rescue the small-scale investors, could manage only around Tk 1,650 crore after two years of its launching.
The fund in May 2011 started its operation after getting approval from the BSEC.
Market operators said the Bangladesh Fund failed to collect Tk 5,000 crore as it failed to boost the market and to offer any dividend to its investors.
The market price of the Bangladesh Fund stood at Tk 1,735.62 crore against its cost price of Tk 1,776.29 crore on June 25.
-With New Age input
