Sebon probes possible scamming of shareholders

KATHMANDU, FEB 07 -
 
The Securities Board of Nepal (Sebon) has asked stockbrokers to provide details about the trading of the shares of Chilime Hydropower Project on suspicion that middlemen have been cheating local shareholders of Rasuwa

by convincing them into selling their shares at less than the market value.

The regulatory body has told brokers to provide the details collected under the “know your customer” rule and buying and selling orders to find out if fast-talking agents had been taking advantage of the local people’s unfamiliarity with shares.

The villagers who lost their land to the project had received shares as part of the compensation package.

Sebon acted after the District Administration Office, Rasuwa asked it to investigate the matter. “We are closely observing the trading of Chilime shares carried out through all the brokers,” said Sebon Spokesperson Niraj Giri.

“We have also been informed that a group of people might be carrying sell orders to purchase the company’s shares for just Rs 600-700 apiece from the local people although actual market prices were much higher. On Thursday, Chilime shares were selling for Rs 1,509 apiece,” he added.

”That’s why we have started enquiries into possible matching of stock prices by middlemen to sell and buy its shares.”

However, Nepse officials have expressed ignorance over the matter. “Nobody is allowed to buy stocks at reduced price by fooling the sellers,” said a Nepse official.

After Sebon allowed the local people to sell their Chilime shares on Jan 26, middlemen are suspected to have swooped down on the village to take advantage of their lack of knowledge of the share market.

The Securities Registration and Issue Regulation 2008 includes a provision that the shares allotted to the local people cannot be sold for three years.

The local people had been allotted 10 percent of the total shares allocated to the general public at the par value of Rs 100 per share.

Other members of the public had to pay a premium price of Rs 408.36 per share.

Out of the total 960,000 shares earmarked for Rasuwa locals, 636,000 units were awarded to the inhabitants of three project-affected VDCs — Goljung, Chilime and Syafru — while the remaining 624,000 units were allocated to the locals of 15 other VDCs

Anurag Dwivedi, Deputy Superintendent of Police at the District Police Office, Rasuwa, said they had started consultations with the government agencies concerned to stop the local people from being cheated.

“We have told them to prevent the ignorant local people from being cheated in the name of selling their shares at prices slightly higher than what they cost,” he added.

However, stockbrokers said that there was no possibility of the local people being hoodwinked into selling their shares at less than the market value. Ram Chandra Bhattarai, director of Aryatara Investments and Securities, said that they were trading Chilime shares almost daily.

“People who cannot sign their names and use their thumb prints instead have to present themselves to buy or sell shares. So there is almost no possibility of middlemen influencing them,” said Bhattarai.

Similarly, Narendra Raj Sijapati, president of the Nepal Stockbrokers’ Association, said, “Share trading is done on the basis of the documents verified by the Citizens Investment Trust, the sales manager of Chilime.

Furthermore, we only issue account payee cheques to the concerned shareholders even if they wish to conduct trading through their representatives to whom they have delegated authority.”

Source: The Kathmandu Post