Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The Commission for the Investigation of Abuse of Authority (CIAA) conducted a raid on the Nepal Stock Exchange (NEPSE) office, citing suspicions of insider trading involving NEPSE staff. This move comes after multiple complaints were lodged against NEPSE employees, alleging misuse of sensitive stock market information for personal gain.
An official from the CIAA confirmed the raid took place on Monday, triggered by allegations that NEPSE employees were engaging in stock trading under the names of family members and friends. “We have seized several documents and mobile phones from NEPSE employees for further investigation,” the source stated.
Insider trading is an unethical practice where individuals with access to confidential information about a company or the stock market use that knowledge to secure unfair financial advantages. A report by the Ministry of Finance two years ago highlighted that insider trading, along with other market manipulation tactics like pump-and-dump and circular trading, had been proliferating within Nepal’s sole stock exchange.
In recent weeks, the NEPSE index has experienced a significant bullish trend, with the market gaining nearly 1,000 points, nearing its all-time high of 3,198.60 points on August 18, 2021. Daily turnover has consistently surpassed Rs 20 billion, raising eyebrows about potential irregularities.
The surge in stock prices has been particularly pronounced in companies with weak financial reports, including NRN Infrastructure, Hathway Investment Company, CDN Hydropower, and Nepal Finance Limited. This has fueled suspicions that insider trading and other forms of market manipulation could be driving these abnormal price hikes.
Former Finance Minister Prakash Sharan Mahat, along with several lawmakers, has voiced concerns about possible share cornering by a small group of influential investors. Share cornering involves large investors accumulating significant shares of a company to manipulate its stock price, often at the expense of smaller investors.
Market experts have also raised alarms about the recent “unnatural surge” in stock prices, emphasizing that the stock market should reflect the underlying fundamentals of the economy. The rapid and seemingly baseless rise in stock values has led to increased scrutiny from various quarters.
Last week, the parliamentary Finance Committee attempted to launch an investigation into potential anomalies within the stock market. However, the investigation stalled due to pressure from political parties and business interests, further complicating efforts to address these concerns.
As the CIAA continues its investigation, the spotlight remains on NEPSE and the broader issue of stock market integrity in Nepal, highlighting the need for stringent oversight and reforms to protect the interests of investors and ensure fair trading practices.
Your email address will not be published. Required fields are marked *
Comment *
Name *
Email *
Website
Save my name, email, and website in this browser for the next time I comment.
