Sebon hesitates to take stand

KATHMANDU:

The capital market regulator is hesitating to take a concrete step on the Nepal Bangladesh Bank share transfer row citing the absence of written documents regarding the wrongdoings.

Since Sunday, brokers have stopped working on behalf of the largest fish in the stock market — Nirmal Pradhan — owing to his involvement in unlawfully selling off the bank’s shares worth Rs 130 million to the general investors. Investors who had bought the shares of the bank from Pradhan in May 2013 have not yet been issued share certificates. Pradhan is said to have sold the shares that he was only holding as collateral and did not own.

The stock brokers had decided to stop executing orders from Pradhan and the orders for the shares of Nepal Bangladesh Bank to put pressure on the regulators to take action in favour of some 1,000 investors that are in the lurch.

“We can take action against someone only after a thorough investigation and for that, we need documents to substantiate the allegations,” informed spokesperson for the regulator — Securities Board of Nepal (Sebon) — Niraj Giri.

“And we have yet to receive any written documents, based on which we can proceed further,” he added.

Laxmi Bahadur Shrestha, a promoter of NB Group and a former NBB director, had pledged some 220,000 unit shares to get a loan from Pradhan with a clause that barred him from selling the shares. Later, Pradhan and Shankar Shrestha pledged the shares at Narayani National Finance to obtain loan. The finance company then auctioned off the shares when the borrowers could not repay the loans.

Investors who had bought the shares were unable to get share certificates issued in their names as Laxmi Bahadur lodged a case at Kathmandu District Court to annul the share transfers. The court also gave the verdict in his favour, thus preventing share registrar Elite Capital to transfer shares to the investors who bought the shares in May last year.

“The victims have written to Sebon along with the evidence of share transaction and a written copy from Elite Capital telling them that the court’s ruling has made their transaction void,” said president of Stock Brokers’ Association of Nepal (SBAN) Narendra Raj Sijapati.

“So, how can Sebon say that brokers and investors have not provided any written documents about the cases?” he asked. According to Sijapati, the investors, brokers and share registrar have had a few rounds of meetings with Sebon officials at the regulator’s office since September 2013 to discuss a way out.

The scores of talks between the stock exchange, Nepal Investors Forum, SBAN and the bank’s officials have so far been futile, compelling the brokers to take a drastic measure that is actually beyond their authority.

Source: THT