Sebon should investigate alleged securities frauds with high confidence

Mukti Aryal

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On Tuesday, Securities Board of Nepal (Sebon) — an apex regulator of the country’s securities markets — issued a press statement raising concerns over the risk of investment. The statement has courted controversies due to its modality and way of revealing unproven facts to the public.


Here are key points about the statement:

  1. Sebon should investigate investors, who were/are involved in alleged securities frauds (insider trading, cornering, circular trading, pumping and dumpling, and many others), not those companies whose stocks were involved in alleged securities frauds.
  2. The risk factor is to be understood and born by the investors, not by the regulator(s). Sebon can’t and should not talk about the risk involved in individual stocks. It should not be doing financial advisory.
  3. Regulators should not issue or speak against the market. Due to Sebon’s reckless statement, investors have to born huge losses today.
  4. Listing out companies is defamatory act. It damages the reputation, image and goodwill of these companies. Sebon should not or can’t do this. If these companies are not involved in securities frauds, they are innocent.
  5. Sebon should do its investigation, if any, with high confidence and should not let anybody know, not even journalists.

Mukti Aryal is a financial economist.