Sebon slaps Rs75,000 fine on brokerage firm

- Post Report, Kathmandu
The Sebon bars disclosure of classified information that can provide undue advantage to individuals and groups, and influence stock trading

Jan 22, 2018-The Securities Board of Nepal (Sebon), the securities market regulator, has imposed a fine of Rs75,000 on Pragyan Securities, a stock brokerage company, for involvement in insider trading. 

The action was taken after the head of the Biratnagar office of Pragyan Securities posted a message in Viber, an instant messaging platform, requesting investors to purchase rights shares of Civil Bank ahead of the annual general meeting of the financial institution. The stockbroker had informed the investors in the Viber group about the quantity of rights shares that the bank was issuing and urged investors to purchase the stocks as soon as they were floated. “These rights shares will provide good returns. We assure that,” the stockbroker had told the Viber group according to a press statement issued by the Sebon on Sunday. 

After this message 

was posted on Viber, complaints were lodged at the Sebon, which then started its investigation.

“The investigation found that Pragyan Securities had failed to carefully monitor activities of its branch office and maintain high business standard. Hence, the fine of Rs75,000,” says the Sebon statement.

The Sebon bars disclosure of classified information that can provide undue advantage to individuals and groups, and influence stock trading. The Securities Act says those engaged in securities trading must maintain high standards and conduct business in a fair manner. The law also says those engaged in securities trading must provide necessary training to employees and keep all the records in a proper manner.

Lately, the Sebon has started taking severe action against brokerage companies engaged in malpractices. 

Around 11 days ago, the Sebon imposed a fine of Rs1 million each on two stock brokering companies - Agrawal Securities and Shreehari Securities - for carrying out transactions of counterfeit share certificates and for failing to conduct due diligence of clients before carrying out transactions. This was the first time the secondary market regulator had imposed such a huge fine on stockbrokers who flouted the rules.

According to the Sebon, Agrawal Securities had conducted transactions using fake share certificates of Chilime Hydropower, while Shreehari Securities was found carrying out transactions using counterfeit share certificates of National Hydropower. These brokerage companies had also failed to conduct due diligence of their clients and deliberately ignored to enforce internal control measures to prevent misconducts during share transactions.

At that time, CEO of Siprabi Securities was also fined Rs50,000 for involvement in transaction of counterfeit shares certificates. Although the crime committed by the chief of this securities company was same as those of the other two, the Sebon had deducted fine amount on him as the brokerage company had informed the regulator about the wrongdoing after carrying out the transaction. 

Published: 22-01-2018 07:52

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