Ex-IFIC Bank MD Fined Tk 5 Crore for Fraudulent Bond Practices

In a significant move, the Bangladesh Securities and Exchange Commission (BSEC) has imposed a Tk 5 crore fine on Shah Alam Sarwar, the former Managing Director (MD) of IFIC Bank, for his involvement in fraudulent activities related to the capital market. The decision was taken at a commission meeting on Tuesday, with the BSEC issuing a formal notice to confirm the penalty.

The fine comes as a result of Sarwar’s role in the mismanagement and irregularities surrounding the issuance of a zero-coupon bond by the Beximco Group’s Shreepur Township. The bond, worth a face value of Tk 1,500 crore, was guaranteed by IFIC Bank, and the organising and advisory role was undertaken by IFIC Investments, the bank’s subsidiary merchant bank.

According to the BSEC, the issue arose from misleading advertising, which falsely promoted the bond under the name “IFIC Amar Bond”. This led investors to believe that the bond was issued by IFIC Bank itself, thereby creating an illusion of security and trust. This deceptive marketing strategy was designed to attract investors through fraudulent means, resulting in financial losses for those misled.

At the time of the bond’s issuance, Shah Alam Sarwar was serving as the MD of IFIC Bank. As a result of his actions, the BSEC has held him accountable for investor deception and imposed the hefty fine.

This latest penalty follows previous actions taken earlier this year. On 30th July, Salman F. Rahman, Vice Chairman of Beximco Group (currently in prison), was fined Tk 100 crore for his involvement in the bond issue. IFIC Bank’s Vice Chairman at the time, Ahmed Sayan F. Rahman, was fined Tk 50 crore. Additionally, former BSEC Commissioner Shamsuddin Ahmed and Imran Ahmed, former CEO of IFIC Investments, were banned for five years from any capital market activities.

The BSEC’s actions reflect its ongoing commitment to protecting investors and ensuring the integrity of the securities market in Bangladesh. Further punitive measures are expected as investigations continue into the Shreepur Township bond fiasco.