Kathmandu, August 13 The sudden decisions of Securities Board of Nepal (SEBON) — the securities market regulator — firstly to form a probe panel to carry out investigation in the capital market to prevent illicit capital flow and then to scrap it — has done nothing except prompt speculations in the stock market. However, just because the committee has been disbanded does not mean SEBON is not keeping an eye on any kind of discrepancies in the secondary market, according to Niraj Giri, executive director of SEBON. “Speculators have created yet another illusion that now the probe panel has been scrapped, SEBON is overlooking all kinds of irregularities in the share market,” he said. “But this is yet another move to mislead the market.” Giri has clarified that the committee formed to look into the illicit capital flow was just for the internal purpose of the board, in line with the responsibility of the regulator for the stability of the market. “But speculators capitalised on the gullibility of investors,” said Giri, adding, “Genuine investors neither had any reason to be wary of the move nor should have been swayed by hearsay.” SEBON had formed a committee on July 14 comprising officials from SEBON, Anti-money Laundering Department under Ministry of Finance, Central Investigation Bureau of Nepal Police and experts of the related fields. The committee had been asked to look into the trading in the country’s only secondary market and submit its report within a month. As per the deadline set by SEBON, the probe panel was near ready to submit its report. But in the meantime, speculators capitalising on SEBON’s move created the illusion among investors that the government was going to take action against big investors. This resulted in the Nepal Stock Exchange (Nepse) index plunging heavily — by a whopping 88.81 points — on August 8 due to panic sell-off in the stock market. After the committee was set up, it had started monitoring the source of income of big investors in the stock market. The share market did not witness any massive fluctuations in the few days following the move. However, after the formation of the new government, those not in favour of the probe panel started spreading misleading information in the market as a tool to draw the government’s attention. According to sources, the finance ministry put pressure on the securities market regulator to dissolve the committee. Following the sharp decline in the stock market, SEBON announced that it had scrapped the probe panel in the evening of August 8. This, in turn, supported the stock market rally on August 9 as investor optimism was buoyed once again and investors went on a buying spree. In view of the recent developments, SEBON has urged investors to properly study the balance sheets of concerned listed companies before making any investment. Small and medium investors are at high risk if they start making investments in a haphazard manner. “SEBON always encourages small and medium investors to make investments in the market for stability in the market,” Giri further said. The probe panel was formed to carry out a study and also for harmonising the directives of SEBON as per the Anti-money Laundering Prevention Act. The SEBON will conduct all the activities from its regular mechanism, as per Giri. “SEBON has its permanent mechanism to regulate the stock market.” The Anti-money Laundering Prevention Act has extended the authority to all regulatory bodies to penalise anyone engaging in money laundering to slap a penalty of up to Rs 50 million.