Regulatory Board's Chairman Alleged of Insider Trading; Finance Ministry Demands Clarification

The Ministry of Finance has sought clarification from Bhishma Raj Dhungana, Chairman of the Securities Board of Nepal. The Finance Ministry has directed to give an explanation within three days regarding the purchase of shares of Sarbottam Cement in the name of Dhungana's daughter.

The first IPO by the Book Building process to be brought by Sarbottam Cement is in controversy at recent times in the investor community. Sarbottam Cement has already concluded the issue manager signing ceremony for the IPO Book Building process. While 40% of the shares will be sold to institutional investors, 60% will be issued to the general public. The company has proposed to issue an IPO worth 60 lakh shares.

Dhungana's daughter Rebeka Dhungana, who lives in the US, has been found to have bought 10,000 shares. According to the story covered by a news portal (and many portals thereafter), Rebeka has been allegedly found to have bought 10,000 shares of Sarbottam after the book building system process started.

Some argue that the company handed over these so-called "golden shares" to the chairman's daughter to influence the IPO price of Sarbottam Cement. The company's IPO issue is the first of its kind in Nepal where the IPO issue price is determined via the book building method. While the procedure considers the issue price via a bidding process, the regulator has the final say. 

The Ministry of Finance's attention has been drawn to the news related to the board which has been published in various media. Refraining from referring to the exact topic, the Ministry of Finance has sent a vaguely phrased letter to the regulatory board demanding clarification.