Trading of Six LR Global Mutual Funds Suspended Indefinitely

Trading of six mutual funds managed by LR Global Bangladesh Asset Management Company has been suspended indefinitely after the Bangladesh Securities and Exchange Commission (BSEC) ordered the removal of the fund manager for allegedly misusing investors’ money.

The trustee of the funds, Bangladesh General Insurance Company (BGIC), announced the suspension on Thursday following directives from the capital market regulator.

The six affected closed-end mutual funds are:

• DBH First Mutual Fund
• Green Delta Mutual Fund
• AIBL 1st Islamic Mutual Fund
• MBL 1st Mutual Fund
• LR Global Bangladesh Mutual Fund One
• NCCBL Mutual Fund-1

According to a notice from the Dhaka Stock Exchange (DSE), BGIC has instructed all banks and brokerage houses maintaining accounts for these funds to immediately halt all debit transactions — including online banking — and suspend all trading activities conducted by LR Global.

The trustee stated that the move aims to protect the interests of unit holders whose investments had been compromised.

BSEC officials said that BGIC will transfer the management of the six mutual funds to another asset management company after settling account issues with LR Global.

An investigation by the BSEC revealed that LR Global had misused nearly Tk 69 crore from the six funds by investing in Padma Printers, a defunct and loss-making company listed on the over-the-counter (OTC) market.

The investment was made in two phases:

• In the first phase, about Tk 24 crore was used to acquire a 51% stake in Padma Printers at an inflated price. The company was later renamed Quest BDC Limited.
• In the second phase, another Tk 45 crore was invested through a private placement of new shares to raise Quest BDC’s paid-up capital.

The regulator stated that these investments were made at highly inflated valuations, effectively wasting investors’ money and violating the principles of fiduciary duty and responsible fund management.

On October 21, the BSEC banned LR Global CEO Reaz Islam for life for his role in the misuse of funds. The commission also ordered the company to return around Tk 90 crore, including interest, to the six mutual funds within 30 days.

If the repayment is not completed within the deadline, Reaz Islam will face a fine of Tk 98 crore, while LR Global directors George M. Stock III and Rezaur Rahman Sohag will each be fined Tk 1 crore.

In addition, the BSEC fined BGIC and six other individuals a total of Tk 9.11 crore for their involvement in the irregularities.