Govt Registers Bill to Hand Over Investigation of Stock Market to Police

February 17: The government has registered a bill to amend Securities Act 2063 in parliament with the proposal of handing over the responsibilities of investigating crimes related to the secondary market to the police.

The Securities Board of Nepal (SEBON) had earlier prepared a draft with necessary provisions to hand over the responsibilities of investigating crimes related to the security markets including insider trading, artificial trading, and fraudulent trading to Nepal Police by amending the Securities Act 2063. SEBON is currently conducting such an investigation. 

The amendment was passed by the previous session of the House of Representatives but could not be endirsed because the meeting of the National Assembly couldn't be held.

The Minister for Law Dhruba Bahadue Pradhan presented the act along with Money Laundering Act in Parliament for amendment. Since the proposal was presented in the previous parliament but was not passed by both houses, it has become inactive, so it was registered again.

The amendment gets legal recognition only after it is passed by the House of Representatives and the National Assembly and then gets authenticated by the president.

Law Ministry Secretary Dhanraj Gyawali said the Some Nepal Acts to amend the Securities Act 2063 and other acts were presented in parliament after careful study.

The ministry aims to reduce some of the responsibilities of the Securities Board and hand them to the police. The attempt to curtail the authority of the board was opposed by experts including those active in the securities market. Earlier, the Ministry of Law and the Office of the Prime Minister and the Council of Ministers were criticized for trying to curtail the board's authority without discussing it with stakeholders. 

Ramesh Hamal, chairman of SEBON, said that the bill needs to be made stronger and in the interest of investors.  

"The board has prepared accordingly. We are constantly doing homework to make the bill stronger and we are discussing with ministries and agencies," he said.

He said that the main goal of the board is to strengthen the Act and pass the Anti-Money Laundering (AML) Safety Protocol. Hamal said that when the AML safety protocol is passed, SEBON will be strong internationally and will have the possibility to receive international funding.

Advocate Jyoti Dahal said that the police cannot investigate crimes such as insider trading, false or artificial trading, and fraudulent trading in the stock market.

"In any capital market in the world, the police do not investigate crimes like insider trading and artificial trading. An expert is needed to investigate the crimes of the securities market. Therefore, the police cannot investigate such crimes," he said.

After the amendment of the law, if a complaint is received by any police officer that someone has engaged in insider trading, the police can arrest them immediately and proceed with the investigation. Therefore, according to the amended Act, some people have criticized that investors will suffer just because someone has filed a complaint. 

Dahal said, "The police can assist in the investigation, but the police should not be the ones leading the investigation of the securities market."

Experts suggest that since the securities market is sensitive, great care should be taken while amending the relevant laws and regulations. At present, there is a need to attract production companies to Nepal's securities market, so experts said that confidence should be maintained so that production companies are not discouraged by the government's behaviour. Experts suggest  that the attraction of investors in securities market should increase after the amendment of the law, so if there is a wide discussion, it can be achieved.