Crest Securities Managing Director Md Shahid Ullah embezzled Tk18 crore and had intended to misappropriate all assets worth Tk100 crore from his nearly 22,000 brokerage clients, police said on Tuesday.
The Detective Branch (DB) of Dhaka Metropolitan Police arrested Shahid Ullah and his wife Nipa Sultana on Monday over embezzlement of shares and investors' money.
The beneficiary owner's (BO) accounts in the member firm of the Dhaka Stock Exchange (DSE) had Tk100 crore in securities.
The arrestees have already withdrawn Tk18 crore from the accounts, DB Additional Commissioner Abdul Baten said during a press conference at the DB office in Dhaka.
Abdul Baten said Md Shahid Ullah and his wife Nipa Sultana shut down the securities house on June 22 and siphoned off Tk18 crore from the office accounts.
When some investors noticed that there was no money or shares in their BO accounts, they went to the stockbroker's office and found it closed. By then, the couple had managed to escape to the countryside.
"They have admitted to embezzling the money," Baten said.
They have also borrowed money from clients, violating the securities law, the additional commissioner added.
According to the securities law, a brokerage firm can take money from clients as deposits into BO accounts. But Crest Securities has collected Tk30 crore in loans from 600 investors with deeds on stamp papers.
Police said the owner wanted to embezzle the Tk30 crore as well.
Earlier in the last week of June, as soon as it noticed irregularities within its member firm, the DSE took prompt action – in consultation with the Bangladesh Securities and Exchange Commission (BSEC) – to freeze remaining assets and request travel restriction and arrest of the brokerage firm's owners.
Later in a press conference, DSE Managing Director Kazi Sanaul Hoq told reporters that the bourse would protect investors' interests – owners of the frozen securities would get a chance to transfer those to a new BO account with another broker through account linking facility.
The bourse would also freeze and sell the Dhaka Stock Exchange Limited shares owned by Crest Securities, along with its brokerage licence, and compensate the cheated clients with the proceeds from the sales.
DSE also invited claims from Crest Securities clients to report what they have lost in the scam. Investors had already claimed over Tk16 crore until last week.
The DSE managing director also said the exchange would only take care of brokerage clients at the brokerage firm, not any of the lenders.
Crest Securities owners had mortgaged their shares of the exchange company to take loans from Social Islami Bank, according to sources.
The bank will not get priority in case of brokerage clients' claim settlements, said the DSE.