The Role of SEBON in Detecting and Preventing Insider Trading


A recent development in the financial landscape has raised different concerns regarding potential instances of insider trading. Companies begin declaring dividends for the new fiscal year 2080/81. It has been observed that stockbrokers accumulating shares of specific companies, notably MBL, ILI, and STC, despite an ongoing market downtrend. The timing of this accumulation coinciding with the start of the fiscal year and dividend declarations is a notable factor. Dividend announcements have a substantial impact on stock prices, and individuals possessing non-public information about these dividends could exploit this knowledge advantage.

Companies like MBL, ILI, and STC have drawn attention due to their strong financial indicators. MBL has highest distributed profit per share there is high dividend potential of MBL. Broker number 62 Holding around 451K

Such as ILI has the paid-up capital of 4,000,000,000.00 and reserve of 240,813,216.00. As per the Beema Samiti, the life insurance company should have minimum capital of Rs.5 arba. There is high chance of distributing 25% bonus share by ILI. Broker number 42 is holding around 329K share.

STC’s undisclosed high dividend potential. These indicators, when combined with the ongoing downtrend in the market, could indicate insider knowledge that is being exploited. Broker number 54 is holding around 20K share.

These indicators, coupled with the bearish market trend, raise suspicions of potential insider knowledge being leveraged.

The situation becomes more intriguing considering the general market downtrend, which usually dissuades investors from aggressive stock accumulation. The fact that certain stockbrokers are actively amassing shares during adverse market conditions strongly suggests the existence of privileged information. The anticipation of higher dividends, if acted upon before public knowledge, can yield significant profits. Such activities not only undermine fair competition but also erode investor confidence in the market’s integrity.

Therefore, in the interest of safeguarding market fairness, regulatory bodies such as SEBON must exercise heightened vigilance and thorough investigation. It is imperative for SEBON to promptly initiate a comprehensive inquiry into the stock accumulation activities of the involved brokers. The primary objective should be to ascertain whether these actions were driven by non-public, material information. Reinforcing market surveillance mechanisms through advanced algorithms and data analytics can aid in detecting abnormal trading patterns. Furthermore, imposing more stringent disclosure norms on insiders, compelling them to promptly report their trading activities, can enhance transparency and expedite the identification of potential insider trading.

Regulators also have a pivotal role to play in educating market participants about the consequences of insider trading. Raising awareness regarding the legal and ethical ramifications of such actions can serve as a deterrent, reducing the likelihood of their occurrence. By proactively addressing these concerns, regulatory bodies can contribute significantly to maintaining market integrity and fostering a level playing field for all investors.


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