If one has been involved in Nepalese stock market for quite a long period of time, one will come across a new Facebook page related to Nepalese stock market every new day. Nepal does not lack the presence of market pundits. Every new day, a new Jim Cramer evolves in Nepalese stock market. (Jim Cramer is the host of Mad Money, American Finance Television Program). There has been no grading of online portals, Facebook news pages and the technicians in the market.
Back in 2016, Bangladesh Securities Exchange and Commission requested Bangladesh Telecommunications Regulatory Commission to bring down 100 Facebook pages as these pages were posting news that would manipulate the price in stock market. In fact pages with quite higher number of followers would post company predicted dividend even before the company has announced it. This would rather manipulate the prices in stock market. The fake facebook pages had almost 22k to 43k of followers. In 2015, the special tribunal formed to deal with stock market-related cases sentenced stock tipster Mahbub Sarwar to two years in jail for manipulating share prices during the 2007-10 share market bubble through Facebook. Sarwar used about 10 Facebook pages and blogs to spread tips on stock prices among a large number of investors during that period. The tribunal on August 17 of the same year also jailed Bangladesh Welding Electrodes managing director Nurul Islam and the then weekly Industry editor Enayet Karim for three years on charge of manipulating share prices of the company in 2007.
Securities Board of Nepal has a lot to learn from Bangladesh Securities Exchange and Commission. A lot of times, different banks and financial institutes in Nepal have come across a lot of biased news. These news and articles in a way or other manipulate the stock market. As a result, it is the individual investors or beginners who become the victim of these manipulations.
There are a lot of closed group Facebook pages related to Nepalese stock market. There are participants who post “How much dividend will the company provide?” What surprise me are the confident replies claiming ABC Company will be offering certain percentage dividend. Investors might not take an individual claiming the news of dividend however, when the claim of a company’s dividend comes as a news source from a page that has at least 10 thousand followers, investors are likely to believe in the news. Nepal Stock Exchange and SEBON should come together to stop the manipulation that happens trough social media.
Besides, insider trading has always been a problem in Nepalese stock market. The Chapter 9 of Securities Board Regulation, 2064 states that, "If any person deals in securities or causes any other person to deal in securities on the basis of any insider information or notice that are unpublished or communicates any information or notice known to such a person in the course of the discharge of his or her duties in manner likely to affect the price of securities such a person shall be deemed to have been committed an insider trading in securities." Although this act certainly talks about the only aspects in which information has been brought out in the form of insider trading, however a lot of information that has not even decided by companies goes into becoming a news. The issue is no more just the publicizing of news before actual announcement but also creating news when no such announcements are going to happen.
There are several Youtube channels that provide messages related to purchase of shares based on no technical and fundamental indicators but rather intuitive and fake news. The presence of such pages is not only an issue for the market but also the existing financial news company. Several pages even replicate the brand image of these existing financial news companies. For instance, there is still a fake Facebook page named ShareSansar with our own cover photo. The page will always remain a threat to us as a company as any manipulating stock news might be uploaded.
In Bangladesh, according to Section 17 of the Securities and Exchange Ordinance 1969, no person is allowed to induce, dissuade, effect, prevent or in any manner influence or turn to his or her advantage the sale or purchase of any security, directly or indirectly. The word “in any manner” clearly depicts the digital medium of manipulating stock prices. It is high time that policies related to stock market in Nepal start focusing on digital issues while resolving the already existing internal trading issues. It is the duty of regulators to regulate each and every financial digital media including ShareSansar. Simply going into an online form of trading won’t take our stock market to greater heights, the consequences that digital media can bring to the online platform should be equally considered.
Through this article, we call out on bankers and executives in banks who have suffered through such fake news and also our competitors who have faced problems of exploitation of their brand images through such fake Facebook pages to report such incidents. As members of the same stock market community, along with regulators, we are also responsible to prevent such manipulation.