KATHMANDU, Aug 15: The Commission for the Investigation of Abuse of Authority (CIAA) has raided the Nepal Stock Exchange (NEPSE) office citing the possibility of the involvement of the NEPSE staff in insider trading.

According to an official of the CIAA, the anti-graft body on Monday raided the NEPSE office after complaints were filed against the NEPSE employees at the authority. The preliminary investigation conducted by the CIAA has shown that the NEPSE staff were found doing stock trading in the name of their family members and friends. 

“We have seized some papers and mobile phones of a number of NEPSE employees for further investigation,” said the source.

The insider trading is an unfair practice in which the authorities concern leak the sensitive information related to stock exchange market in order to secure undue benefits. A study conducted by the Ministry of Finance two years ago also showed that anomalies like insider trading, pump-and-dump and circular trading had been flourishing in the country’s only stock exchange market.

Of late, the secondary market has been in a bullish trend mainly in the past few weeks. Over the period, the market gained almost around 1,000 points, reaching close to the record high mark of 3,198.60 points on August 18, 2021. Likewise, the turnover amount is being recorded at above Rs 20 billion almost everyday.

At present, the anomalies are suspected to have taken place mainly due to abnormal surge in the share prices of the companies that have posted their pathetic financial reports. Few companies including NRN Infrastructure, Hathway Investment Company, CDN Hydropower and Nepal Finance Limited, among others, have achieved an excessive surge in their share prices.

Former Finance Minister Prakash Sharan Mahat and a number of lawmakers have also been raising the issues of possible share cornering in the secondary market by a handful of big investors, just to hike the share prices of selected companies. In a cornering mechanism, big investors hold a significant number of shares in order to manipulate their prices.

Experts have also been raising questions on the recent ‘unnatural surge’ in stock prices. According to them, the stock market should act as mirroring the improved fundamentals of an economy.

Last week, the parliamentary Finance Committee also attempted to investigate possible anomalies in the share market. However, it could not see progress due to pressures from political parties and business fronts. 

 
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