KATHMANDU, August 24: Chandra Singh Saud, Chief Executive Officer of Nepal Stock Exchange (Nepse), resigned from his position on Tuesday, citing accusation of ‘moral hazard’ for purchasing shares of Sarbottam Cement.
Sarbottam Cement is currently in the process of issuing primary shares to the public through the book building process. While the company is looking to receive approval from the Securities Board of Nepal (Sebon), Saud allegedly purchased 10,000 units of the company’s shares in the name of his wife.
The cement company is issuing its primary shares at Rs 750 per unit. However, Saud had purchased the shares at just Rs 250 per unit by creating influence of the authority as the front line regulator of the country’s stock exchange market.
Saud along with the Sebon’s Chairman Bhisma Raj Dhungana has been alleged for taking undue benefit for purchasing shares of the cement company. Dhungana has also been accused of purchasing 11,992 units of general shares of the same company in the name of his daughter, who currently resides in the USA.
The duos have been defending themselves by saying that it is not illegitimate to purchase primary shares of a company that is not listed at the Nepse. Both Saud and Dhungana, however, have fallen into a trap after a number of government bodies have started raising questions on moral issues over the involvement in insider trading by the high ranking officials of the regulatory bodies.
Earlier, the Ministry of Finance sought clarifications from the duos while also forming a panel to investigate the matter. Similarly, the Commission for the Investigation of Abuse of Authority (CIAA) has also confiscated related documents for the purpose of conducting investigation into the case.
Likewise, the Finance Committee under the House of Representatives last week directed the government to carry out an investigation immediately into the alleged involvement of chiefs of the regulatory bodies in the suspicious insider trading. The parliamentary panel also directed the government bodies concerned to take action against them.