Allegations of 'fraudulent' transaction in promoters' shares of Lumbini Bank has exposed the not-so-pretty face of the stock market that has been growing steadily over the recent past days.
A group of investors with their brokers today went to the office of Nepal Finance Company (Nefisco) to ask its chief executive officer (CEO) Sudhindra Lal Pradhan either to give them their share certificates that they have bought some six months ago or return their money.
They accused Nefisco of having cheated them by not disclosing the status of the shares that it sold them. The promoters shares have separate status and they can be bought and sold like ordinary shares also. "But the pricing mechanism is different," Anoj Agrawal, broker number 6, who has bought 3500 units of the disputed promoters' shares of Lumbini Bank Ltd said. He added that these have to be disclosed before selling. "But Nefisco did not disclosed the status of these shares," Agrawal said.Earlier, Nefisco had tried to sell its 1,00,000-unit of promoters' shares. But it could not sell these as its share certificate was marked promoters.
"Then they split the shares and this time they were successful in selling it at the market price," Agrawal said adding that due to non-disclosure of the promoters' share they 'fraudulently' sold these like ordinary shares.
However, Nefisco CEO Pradhan countered that Nefisco had not cheated any of the buyers. "In fact, we came to know after a long time that Lumbini Bank did not transfer the shares into the buyers' names," he said. Pradhan added that when Nefisco inquired of the bank it replied that the name transfers could not be done as the sold shares were promoters' shares.
"Lumbini Bank has to give in writting that the promoters' shares are not transferrable," Pradhan claimed.He also blamed the brokers for creating the commotion saying that they knew the status of the shares but did not take the investors into confidence.Agrawal said, "We also had several meetings with the Securities Board of Nepal (Sebon), Nepse, Lumbini Bank, Nefisco that sold the shares and also those investors who bought the shares." He added that Nepse had clearly told the finance company to return the money to the buyers but it was not showing willingness to do so.
Shovan Dev Pant, chief executive officer of Lumbini Bank Ltd said that Nefisco was required to come according to Nepal Rastra Bank's (NRB) regulations to sell promoters' shares. "As a commercial bank, we can not entertain any request that falls outside the purview of the NRB's rules and regulations," he said.