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BSEC Authorized Representative practice questions

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Question 1Securities laws, rules and regulations administered by BSEC

Which body is the statutory regulator empowered to administer securities laws in Bangladesh?

  1. Insurance Development and Regulatory Authority
  2. Dhaka Stock Exchange Limited
  3. Bangladesh Securities and Exchange Commission Correct answer.
  4. Bangladesh Bank

Explanation

The Bangladesh Securities and Exchange Commission is the statutory regulator created to protect investors and regulate the securities market. Bangladesh Bank handles banking and monetary policy, while the exchanges operate trading platforms under BSEC oversight.

Question 2Securities laws, rules and regulations administered by BSEC

A brokerage firm wants to conduct a public offering of shares. Which document must be reviewed and approved before the offer proceeds?

  1. A prospectus filed with and approved by BSEC Correct answer.
  2. A membership certificate from the stock exchange
  3. An audited tax return submitted to the tax authority
  4. A trade licence issued by the city corporation

Explanation

A public offer of securities requires a prospectus that complies with BSEC disclosure requirements and receives regulatory approval before the offer opens. Other documents relate to business licensing or tax compliance and do not authorize a public issue.

Question 3Securities laws, rules and regulations administered by BSEC

Which of the following is a primary purpose of securities regulation under BSEC's mandate?

  1. Determining the market price of each listed security
  2. Guaranteeing profits for retail investors
  3. Setting the interest rate on bank deposits
  4. Protecting investors and ensuring fair, orderly markets Correct answer.

Explanation

Securities regulation aims to protect investors, promote fair and transparent markets, and reduce systemic risk through disclosure and conduct rules. Regulators do not guarantee investment returns or set prices, because market participants determine prices through trading.

Question 4Securities laws, rules and regulations administered by BSEC

An intermediary wishes to deal in securities on behalf of clients. What must it obtain from BSEC?

  1. A stock exchange trading terminal
  2. A registration certificate as a securities broker or dealer Correct answer.
  3. A bank guarantee from a commercial bank
  4. A recommendation letter from an issuer

Explanation

Entities that act as brokers, dealers, or other market intermediaries must be registered with BSEC and satisfy fit-and-proper, capital, and conduct requirements. A trading terminal or bank guarantee may be operational conditions but cannot substitute for registration.

Question 5Securities laws, rules and regulations administered by BSEC

Which statement best describes the disclosure philosophy underlying Bangladeshi securities law?

  1. Intermediaries may keep material information confidential from clients
  2. Issuers must disclose material information so investors can make informed decisions Correct answer.
  3. Investors must rely on government evaluation of security quality
  4. Regulators approve only securities that are certain to perform well

Explanation

The disclosure-based regime requires issuers and intermediaries to publish material information so that investors can assess risk themselves. The regulator reviews disclosure quality rather than guaranteeing the merits of an investment.

Question 6Securities laws, rules and regulations administered by BSEC

A company's shares are listed on a recognized stock exchange. Which obligation applies to the company regarding price-sensitive information?

  1. Disclose it promptly to the exchange and the public Correct answer.
  2. Delay disclosure until the annual general meeting
  3. Share it only with major institutional holders
  4. Report it solely to its internal auditors

Explanation

Listed companies must promptly disclose material or price-sensitive information to the exchange so all investors have equal access. Selective disclosure to favoured holders breaches fair-treatment principles.

Question 7Securities laws, rules and regulations administered by BSEC

Which activity is prohibited as insider trading under securities law?

  1. Selling shares to rebalance a retirement portfolio
  2. Investing based on publicly announced dividend news
  3. Trading on unpublished price-sensitive information obtained by virtue of a position of trust Correct answer.
  4. Buying shares after reading a published annual report

Explanation

Insider trading involves dealing in securities while in possession of unpublished price-sensitive information obtained through a fiduciary or employment relationship. Trading on published information or ordinary portfolio decisions is lawful.

Question 8Securities laws, rules and regulations administered by BSEC

What is the principal role of a stock exchange such as the Dhaka Stock Exchange within the regulatory framework?

  1. Setting monetary policy for the country
  2. Issuing government treasury bonds
  3. Providing a regulated trading platform and listing framework under BSEC oversight Correct answer.
  4. Guaranteeing the solvency of listed companies

Explanation

A stock exchange provides the regulated venue for trading, applies listing requirements, and enforces market conduct rules subject to BSEC oversight. It does not issue government debt, set monetary policy, or guarantee issuer solvency.

Question 9Securities laws, rules and regulations administered by BSEC

An investor receives a prospectus for a new public issue. Under BSEC rules, what is the minimum period the subscription must generally remain open so investors can consider the offer?

  1. Thirty days
  2. One day
  3. Three days
  4. Five working days Correct answer.

Explanation

Public issue subscriptions must remain open for a minimum period so investors have adequate time to review the prospectus and decide. A five working day minimum is the standard requirement, though the offer may stay open longer.

Question 10Securities laws, rules and regulations administered by BSEC

A director of a listed company learns of an unannounced major contract and buys shares before the announcement. Which offence has most likely occurred?

  1. Market manipulation
  2. Insider trading Correct answer.
  3. Misstatement in a prospectus
  4. Front running by a broker

Explanation

Trading while in possession of unpublished price-sensitive information obtained through a directorship is insider trading. Manipulation involves artificial price influence, and prospectus misstatement concerns offering documents.

Question 11Securities laws, rules and regulations administered by BSEC

A group of traders coordinates purchases to create a false impression of active demand and then sells at inflated prices. This conduct is best characterized as:

  1. Underwriting
  2. Market manipulation Correct answer.
  3. Portfolio diversification
  4. Legitimate arbitrage

Explanation

Coordinated trading intended to create a misleading appearance of demand is market manipulation, which is prohibited because it distorts price discovery. Arbitrage exploits genuine price differences and is lawful.

Question 12Securities laws, rules and regulations administered by BSEC

A broker executes a client's order but allocates a better price to its own proprietary account. Which rule has the broker most likely breached?

  1. Listing disclosure obligations
  2. Capital adequacy requirements
  3. Settlement cycle rules
  4. Best execution and fair dealing with clients Correct answer.

Explanation

Intermediaries owe clients fair dealing and best execution, meaning client interests must not be subordinated to the firm's proprietary trading. Capital rules, listing disclosure, and settlement timing address different regulatory concerns.

Question 13Securities laws, rules and regulations administered by BSEC

Under BSEC rules, which of the following best describes the treatment of client money held by a securities broker?

  1. It becomes the broker's property upon deposit
  2. It must be kept separate from the broker's own funds Correct answer.
  3. It may be freely used to fund the broker's proprietary trading
  4. It may be commingled with the broker's operating account

Explanation

Client funds must be segregated from the intermediary's own assets so that they remain available to clients and are protected if the firm fails. Using or commingling client money with firm assets is prohibited.

Question 14Securities laws, rules and regulations administered by BSEC

A listed company plans to issue rights shares to existing shareholders. Which statement reflects the typical regulatory treatment?

  1. Rights issues are entirely exempt from any BSEC filing
  2. The issue price must equal the previous day's closing price
  3. Only foreign shareholders may participate
  4. The company must comply with BSEC requirements on disclosure and shareholder entitlement Correct answer.

Explanation

Rights issues give existing shareholders a pre-emptive entitlement and must follow BSEC requirements on disclosure and procedural fairness. They are not wholly exempt, and pricing is determined under the applicable rules rather than fixed to a single day's close.

Question 15Securities laws, rules and regulations administered by BSEC

Which of the following would most likely constitute a misstatement in a prospectus?

  1. Reporting audited financial results that differ from forecasts
  2. Omitting a material pending lawsuit from the risk disclosures Correct answer.
  3. Disclosing a known contingent liability that later materializes
  4. Publishing the offering timetable accurately

Explanation

A prospectus must contain all material information, so omitting a significant pending lawsuit is a misstatement by omission. Disclosed risks that later occur and accurate reporting do not amount to misstatements.

Question 16Securities laws, rules and regulations administered by BSEC

A company's shares are suspended from trading by the exchange. What is the most likely regulatory rationale?

  1. To punish the company's competitors
  2. To protect investors and market integrity pending resolution of a compliance concern Correct answer.
  3. To transfer ownership to the government
  4. To increase the company's share price

Explanation

Trading suspension is a protective measure used when continued trading could harm investors or undermine market integrity, for example during unresolved disclosure failures. It is not a price-support tool, a sanction on rivals, or a route to state ownership.

Question 17Securities laws, rules and regulations administered by BSEC

Which of the following is generally required of a person seeking to acquire a substantial controlling stake in a listed company?

  1. Obtain approval from the employees' union
  2. Transfer the shares to the exchange
  3. Notify the regulator and comply with the takeover code requirements Correct answer.
  4. Publish the acquisition in a foreign newspaper

Explanation

Acquisitions of control are governed by takeover rules that require notification, disclosure, and often a mandatory offer to remaining shareholders. Union approval, foreign publication, or share transfer to the exchange are not legal conditions.

Question 18Securities laws, rules and regulations administered by BSEC

A mutual fund is established in Bangladesh. Which statement best describes its regulatory position?

  1. It is regulated solely by the central bank
  2. It may only invest in real estate
  3. It is exempt from all securities regulation
  4. It must be registered and operated under BSEC rules with a licensed asset manager and custodian Correct answer.

Explanation

Collective investment schemes must be registered with BSEC and operated through licensed parties such as an asset manager and custodian, with investments governed by the scheme's approved parameters. They are not exempt from regulation or confined to real estate.

Question 19Securities laws, rules and regulations administered by BSEC

An issuer's auditor discovers that revenue was overstated in the financial statements included in an approved prospectus. What is the most appropriate regulatory consequence?

  1. The auditor alone bears all criminal liability
  2. The issuer faces potential liability and corrective disclosure obligations Correct answer.
  3. Investors lose all legal remedies
  4. The prospectus automatically becomes valid without change

Explanation

Misleading financial disclosure exposes the issuer and responsible persons to liability and requires corrective disclosure to the market. Liability is not confined to the auditor, and investors retain remedies for losses caused by the misstatement.

Question 20Securities laws, rules and regulations administered by BSEC

A broker accepts an order from a client but trades for its own account first at a more favourable price. Which prohibited practice does this illustrate?

  1. Front running Correct answer.
  2. Short selling
  3. Hedging
  4. Market making

Explanation

Front running occurs when an intermediary exploits advance knowledge of a client order to trade for its own benefit before executing the client's instruction. Short selling, hedging, and market making are distinct activities governed by separate rules.

Question 21Securities laws, rules and regulations administered by BSEC

A listed issuer fails to hold its annual general meeting within the prescribed period. Which regulatory response is most consistent with BSEC's enforcement powers?

  1. Cancelling all trades executed during the year
  2. Seizing the personal assets of all shareholders
  3. Automatically delisting the company without any hearing
  4. Imposing penalties or directing the issuer to comply within a specified time Correct answer.

Explanation

BSEC may impose penalties, issue directions, or require corrective action when an issuer breaches its obligations such as holding the annual general meeting on time. Automatic delisting without process, shareholder asset seizure, and trade cancellation are not proportionate standard responses.

Question 22Securities laws, rules and regulations administered by BSEC

Two listed companies propose a merger. Which consideration is central to the regulatory review of the transaction?

  1. Whether the merger is disclosed and approved in accordance with applicable corporate and securities rules Correct answer.
  2. Whether the merger reduces the number of listed companies
  3. Whether the chief executives are related by family
  4. Whether the combined entity will have the largest market share in its industry

Explanation

Mergers involving listed companies must follow disclosure, shareholder approval, and procedural requirements under corporate and securities law so that investors can assess the transaction. Family relationships, market share size, and listing counts are not the central legal criteria.

Question 23Securities laws, rules and regulations administered by BSEC

An intermediary's registration is proposed for cancellation. Which procedural safeguard is most consistent with principles of administrative fairness?

  1. Requiring the intermediary to waive all appeal rights
  2. Providing notice of the grounds and an opportunity to be heard before a final decision Correct answer.
  3. Delegating the decision to a competitor firm
  4. Cancelling registration immediately without any communication

Explanation

Regulatory action affecting a licence should follow due process, including notice of the alleged grounds and an opportunity to respond before a final determination. Immediate cancellation without communication, delegation to a rival, or forced waiver of appeal rights would be unfair.

Question 24Securities laws, rules and regulations administered by BSEC

A company discloses selective price-sensitive information to a favoured analyst before public release. Which principle is most directly breached?

  1. Capital adequacy of the issuer
  2. The minimum subscription period for new issues
  3. The settlement cycle for trades
  4. Equal access to information and fair treatment of investors Correct answer.

Explanation

Securities regulation requires that material information be released to the market as a whole so that all investors can act on the same basis. Selective disclosure gives recipients an unfair advantage and undermines market integrity.

Question 25Securities laws, rules and regulations administered by BSEC

Which body is the statutory regulator of Bangladesh's capital market, empowered to make rules for securities issuance and trading?

  1. Bangladesh Bank
  2. Insurance Development and Regulatory Authority
  3. Bangladesh Securities and Exchange Commission Correct answer.
  4. Registrar of Joint Stock Companies

Explanation

The Bangladesh Securities and Exchange Commission is the statutory regulator of the securities market, established under the securities commission legislation and empowered to frame rules on public issues, intermediaries and trading conduct. Bangladesh Bank regulates banking and payment matters, not securities issuance.

Question 26Securities laws, rules and regulations administered by BSEC

An issuer wishes to raise capital from the public through an initial public offering. Which step is a precondition under BSEC rules before subscription opens?

  1. Obtaining approval of the prospectus from the Commission Correct answer.
  2. Publishing the prospectus only after subscription closes
  3. Securing a bank guarantee equal to the issue size
  4. Registering the shares on a foreign exchange first

Explanation

A public issue requires a prospectus that has been submitted to and approved by the Commission before subscription can open. The approved prospectus must then be published so investors can make an informed decision.

Question 27Securities laws, rules and regulations administered by BSEC

Which document must a collective investment scheme publish so that prospective unit holders can assess its objectives, costs and risks before investing?

  1. A trust deed filed only with the trustee
  2. An internal audit charter
  3. A quarterly management report
  4. An information memorandum or prospectus approved by the Commission Correct answer.

Explanation

Collective investment schemes must offer units through an approved prospectus or information memorandum that discloses investment objectives, fees, risk factors and the scheme's structure. This document enables informed investment decisions and is subject to regulatory approval.

Question 28Securities laws, rules and regulations administered by BSEC

Which of the following is a core licensing requirement for a person wishing to act as a stock dealer or broker in Bangladesh?

  1. Registration with the Commission Correct answer.
  2. Certification by a foreign securities regulator
  3. Membership of a trade association
  4. Approval by the local chamber of commerce

Explanation

Intermediaries such as brokers and dealers must be registered with the Commission before carrying on securities business, in addition to holding exchange membership where applicable. Registration is the central regulatory gate for market intermediaries.

Question 29Securities laws, rules and regulations administered by BSEC

A depositor holds shares in dematerialised form through a depository participant. Which statement best describes the participant's role?

  1. It maintains the investor's securities account and records transfers Correct answer.
  2. It approves the issuer's annual financial statements
  3. It guarantees the market price of the securities
  4. It acts as trustee for the issuer's bondholders

Explanation

A depository participant operates as an account-holder interface with the central depository, maintaining investor accounts and recording credits, debits and transfers of dematerialised securities. It does not guarantee prices or perform issuer-side functions.

Question 30Securities laws, rules and regulations administered by BSEC

Which statement best describes the Commission's general approach to regulating takeovers of listed companies?

  1. Takeovers are prohibited without government ownership
  2. Takeovers are allowed only between companies in the same industry
  3. Takeovers are permitted subject to disclosure and a fair exit opportunity for shareholders Correct answer.
  4. Takeovers require approval by every individual shareholder

Explanation

Takeover regulation is built around transparency and equal treatment: an acquirer must disclose its stake and intentions, and remaining shareholders are generally offered a fair exit. Blanket prohibitions or industry restrictions are not the regulatory approach.

Question 31Securities laws, rules and regulations administered by BSEC

Which conduct by a registered intermediary is most clearly inconsistent with its duty of fair dealing toward clients?

  1. Providing a written contract note for each trade
  2. Churning a client account to generate commissions Correct answer.
  3. Executing a client order at the prevailing market price
  4. Recommending a product after disclosing the commission earned

Explanation

Churning, meaning excessive trading to generate commissions without regard to the client's interests, breaches the intermediary's duty of fair dealing and loyalty. Executing orders properly, disclosing commissions and issuing contract notes are all consistent with regulatory expectations.

Question 32Securities laws, rules and regulations administered by BSEC

Which of the following best describes the purpose of margin and capital adequacy requirements imposed on brokers?

  1. To set a minimum price for listed securities
  2. To increase the exchange's trading volume
  3. To limit the number of listed companies
  4. To ensure intermediaries can meet obligations to clients and counterparties Correct answer.

Explanation

Capital and margin requirements are prudential tools designed to keep intermediaries solvent enough to settle trades and return client assets. They protect clients and the clearing system rather than influencing prices or listing numbers.

Question 33Securities laws, rules and regulations administered by BSEC

A company's approved prospectus omits a material litigation claim that could significantly affect its finances. A regulator later reviews the document. Which regulatory concern is most directly engaged?

  1. Non-payment of the auditor's professional fees
  2. Breach of the exchange's trading-hour schedule
  3. Late submission of the company's tax return
  4. Failure of the disclosure standard for material information Correct answer.

Explanation

Prospectus regulation requires disclosure of all material facts, including significant litigation, so investors can assess risk accurately. Omitting a material claim undermines the disclosure standard even if the document is otherwise complete.

Question 34Securities laws, rules and regulations administered by BSEC

An issuer wants to allot shares to a small group of institutional investors without a public offer. Which regulatory characterization is most accurate?

  1. It may qualify as a private placement subject to prescribed conditions and reporting Correct answer.
  2. It is prohibited in all circumstances
  3. It requires approval only from the stock exchange
  4. It is a public issue requiring a full prospectus

Explanation

Placements to a limited number of investors may be treated as private placements, which are subject to conditions on investor numbers, disclosure and post-allotment reporting rather than a full public prospectus. The regulatory line depends on whether the offer is made to the public.

Question 35Securities laws, rules and regulations administered by BSEC

A listed company's share price rises sharply before the board formally approves a large acquisition. The regulator investigates possible leakage. Which control is most relevant to the issuer's obligations?

  1. Suspending the company's external audit
  2. Increasing the dividend payout ratio
  3. Changing the company's fiscal year end
  4. Maintaining a confidential-insider list and restricting access to deal information Correct answer.

Explanation

Issuers handling price-sensitive information are expected to keep it confidential, restrict access on a need-to-know basis and maintain records of persons who have access. These controls reduce the risk of leakage and support later investigation.

Question 36Securities laws, rules and regulations administered by BSEC

A brokerage firm commingles client funds with its own operating account to cover a short-term cash shortage. Which regulatory conclusion is most appropriate?

  1. This is acceptable if the shortage is repaid within a month
  2. This is acceptable if no client complains
  3. This is acceptable if the firm's board approves it
  4. This breaches the segregation requirement for client assets Correct answer.

Explanation

Client money and securities must be segregated from the intermediary's own assets so that client property is protected on insolvency and cannot fund the firm's operations. Using client funds for firm expenses is a breach regardless of later repayment or board approval.

Question 37Securities laws, rules and regulations administered by BSEC

A company applies to list its shares on an exchange. Which obligation typically arises immediately upon listing?

  1. Continuous disclosure of price-sensitive information to the market Correct answer.
  2. Freezing of all promoter shareholdings indefinitely
  3. Exemption from the securities laws
  4. Guaranteed minimum dividend payments

Explanation

Listing brings continuing obligations, the central one being timely disclosure of price-sensitive information so that all investors trade on equal information. Listing does not guarantee dividends, freeze promoter holdings permanently, or exempt the issuer from regulation.

Question 38Securities laws, rules and regulations administered by BSEC

An investor claims a broker failed to follow instructions and sold securities without authorisation. Which record is most important to resolving the dispute?

  1. The client's signed order and the resulting contract note Correct answer.
  2. The broker's marketing brochure
  3. The exchange's annual report
  4. The issuer's dividend history

Explanation

Disputes about unauthorised trades are resolved by reference to the client's order instructions and the contract note evidencing execution. Maintaining accurate order and transaction records is therefore a core record-keeping obligation for intermediaries.

Question 39Securities laws, rules and regulations administered by BSEC

A listed issuer wishes to buy back its own shares in the market. Which regulatory concern is most central to the review of such a programme?

  1. Whether the buyback could distort the market or disadvantage remaining shareholders Correct answer.
  2. Whether the company's employees approve the buyback
  3. Whether the company's auditor is a foreign firm
  4. Whether the buyback increases the number of listed shares

Explanation

Buyback rules focus on market integrity and equal treatment of shareholders, including price manipulation risks, disclosure of the programme and limits on timing and volume. Employee approval, auditor nationality and share count increases are not the central concerns.

Question 40Securities laws, rules and regulations administered by BSEC

A listed company's quarterly financial results are due but the company delays publication without explanation. Which regulatory consequence is most consistent with the disclosure regime?

  1. Automatic delisting of the company
  2. Immediate criminal liability of every shareholder
  3. Cancellation of the auditor's licence
  4. Enforcement action for breach of periodic reporting obligations Correct answer.

Explanation

Periodic reporting deadlines are mandatory, and unexplained delay exposes the issuer to regulatory scrutiny and enforcement such as warnings, penalties or other directions. Automatic delisting, shareholder liability and auditor licence cancellation are not the standard consequences.

Question 41Securities laws, rules and regulations administered by BSEC

A securities firm wants to offer margin financing to clients for share purchases. Which regulatory condition is most likely to apply?

  1. Margin lending must comply with prescribed limits and be disclosed to the client Correct answer.
  2. Margin lending is permitted only for foreign investors
  3. Margin lending may exceed any limit if approved by the exchange
  4. Margin lending requires no record of client consent

Explanation

Margin financing is permitted only within regulatory limits on loan-to-value, eligible securities and client disclosure, because leverage amplifies both client and systemic risk. Records of client consent and compliance with limits are essential.

Question 42Securities laws, rules and regulations administered by BSEC

A company's directors wish to issue bonus shares to existing shareholders. Which statement best reflects the regulatory approach?

  1. Bonus issues require no disclosure because no cash is raised
  2. Bonus issues must comply with prescribed conditions and be disclosed to shareholders and the regulator Correct answer.
  3. Bonus issues are prohibited for listed companies
  4. Bonus issues require approval by the stock exchange only

Explanation

Bonus issues, although not raising cash, affect capital structure and share price, so they must satisfy prescribed conditions and be disclosed to shareholders and the regulator. The absence of new cash does not remove the disclosure obligation.

Question 43Securities laws, rules and regulations administered by BSEC

An issuer and its underwriter agree that the underwriter will take up any unsubscribed portion of a public issue. Which regulatory purpose does this arrangement primarily serve?

  1. Exempting the issuer from disclosure
  2. Guaranteeing the issuer receives the intended proceeds Correct answer.
  3. Setting the market price after listing
  4. Transferring regulatory approval to the underwriter

Explanation

Underwriting allocates the risk of undersubscription to the underwriter, giving the issuer greater certainty that the intended capital will be raised. It does not set post-listing prices, remove disclosure duties or transfer regulatory approval.

Question 44Securities laws, rules and regulations administered by BSEC

A listed company proposes to change its principal business activity from textiles to software development. Which regulatory treatment is most appropriate?

  1. No approval is needed because the company remains listed
  2. Only the company's auditors must approve the change
  3. The change requires shareholder approval and regulatory disclosure as a material change Correct answer.
  4. The change is automatically approved once the board resolves it

Explanation

A fundamental change in business activity is material to shareholders and the market, so it requires shareholder approval through the proper corporate process and timely disclosure. Board resolution alone does not suffice for such a significant change.

Question 45Securities laws, rules and regulations administered by BSEC

An intermediary applies for registration but its proposed chief executive has a prior conviction for securities fraud. How should the regulator most appropriately treat this fact?

  1. Treat it as relevant to the fit-and-proper assessment of the applicant Correct answer.
  2. Grant registration with a warning letter
  3. Ignore it because the conviction involved a different company
  4. Refer the matter solely to the stock exchange

Explanation

Registration decisions include a fit-and-proper assessment of directors and senior officers, and a prior securities fraud conviction is directly relevant to honesty and integrity. Such facts may justify refusal or conditions on registration.

Question 46Securities laws, rules and regulations administered by BSEC

A group of connected investors gradually accumulates shares in a listed company through multiple nominee accounts to avoid triggering disclosure. Which regulatory characterization is most accurate?

  1. A breach only if the company objects
  2. Permissible because no single account holds a controlling stake
  3. Permissible because each account is below the threshold individually
  4. A likely breach of disclosure rules because connected holdings are aggregated Correct answer.

Explanation

Disclosure thresholds apply to holdings aggregated across connected persons and concerted parties, precisely to prevent circumvention through nominee accounts. Structuring holdings to evade disclosure undermines the transparency the rules require.

Question 47Securities laws, rules and regulations administered by BSEC

A regulator discovers that a broker has been front-running client orders using information about pending large trades. Which regulatory response is most consistent with the legal framework?

  1. Referring the matter to the issuer's audit committee
  2. Requiring the broker to publish a public apology only
  3. Treating it as a private contractual matter between broker and client
  4. Initiating enforcement for market abuse and breach of fiduciary duty Correct answer.

Explanation

Front-running misuses confidential client order information for personal or firm gain, harming clients and market integrity, and engages both market abuse prohibitions and fiduciary duties. The appropriate response is regulatory enforcement, not private resolution or mere apology.

Question 48Securities laws, rules and regulations administered by BSEC

A listed company's controlling shareholder proposes to sell its entire stake to a foreign strategic investor. Which regulatory issue is most central to the review?

  1. Whether the transfer triggers a mandatory offer obligation to other shareholders Correct answer.
  2. Whether the foreign investor speaks Bengali
  3. Whether the existing auditor will resign
  4. Whether the company's registered office will move

Explanation

A transfer of control can trigger mandatory offer obligations so that remaining shareholders receive an exit on comparable terms, and it requires disclosure of the change in control. Language, office location and auditor resignation are not the central regulatory issues.

Question 49Securities laws, rules and regulations administered by BSEC

A company discovers that its previously published financial statements contained an error that overstated profit. Which regulatory step is most appropriate?

  1. Restate the financial statements and disclose the correction to the market Correct answer.
  2. Silently adjust the figures in the next annual report
  3. Destroy the original statements to avoid confusion
  4. Withhold the correction until the next general meeting

Explanation

When previously published financial information is materially inaccurate, the issuer should restate it and disclose the correction promptly so investors are not misled. Silent adjustment, delayed disclosure or destruction of records would compound the breach.

Question 50Securities laws, rules and regulations administered by BSEC

A newly licensed securities dealer in Bangladesh wants to conduct its business from a single office and asks what minimum net capital it must maintain. Under the securities laws and rules administered by BSEC, which requirement best captures the core capital-adequacy obligation for such a dealer?

  1. The dealer must maintain a fixed deposit with a scheduled bank equal to one year of projected operating expenses, reviewed annually by its auditors.
  2. The dealer must hold capital equal to the total value of all client securities held in custody, regardless of the dealer's own liabilities.
  3. The dealer need only maintain minimum capital at the time of licensing; ongoing net capital is not monitored after registration is granted.
  4. The dealer must at all times maintain minimum net capital set by BSEC rules, calculated so that assets exceed liabilities by the prescribed amount, and must report any shortfall promptly. Correct answer.

Explanation

BSEC's capital and net-capital rules require a registered securities dealer to keep a minimum level of net capital at all times, not merely at licensing. Net capital is computed by deducting liabilities and prescribed illiquid or risky assets from total assets so that a buffer exists against losses. A shortfall must be rectified and reported to the regulator, since the requirement is a continuing prudential obligation.