3 years imprisonment and fine up to 3 crores for insider trading

A proposed amendment bill to the Securities Act, 2063 (2006) has been registered in the Federal Parliament, aiming to extend the jurisdiction of the Securities Board of Nepal and enable it to investigate banking transactions. The proposed amendment is expected to strengthen the Securities Board's role in financial transactions and contribute to the improvement of the capital market.

Key Points of the Bill:

1. Investigation of Banking Transactions:

   • The Securities Board will be able to request the Nepal Rastra Bank to provide necessary records for investigating any securities-related transactions conducted by individuals, companies, or institutions.

   • Provisions have been made to maintain confidentiality during the investigation process and facilitate coordination among regulatory bodies.

2. Securities Board Directives:

   • The Securities Board will have the authority to issue necessary directives or orders to securities markets, businesses, and registration institutions, taking into account government policy directions, the state of the capital market, and investor interests.

   • Based on inspection and audit reports, the Board will have the power to cancel securities registration or revoking licenses.

3. Severe Penalties for Insider Trading:

   • The bill proposes penalties of up to 3 years of imprisonment and fines up to 30 million Nepali Rupees for involvement in insider trading, or both penalties.

   • Strict penalties are also proposed for false transactions, price manipulation, or actions affecting the securities market.

4. Action Against Fraudulent Details and Forgery:

   • Individuals involved in providing misleading information or fraudulent transactions may face up to 3 years of imprisonment and fines up to 5 million Nepali Rupees.

   • Severe penalties are also proposed for destruction or concealment of written records or documents.

5. Penalties for Violating Regulations:

   • Organizations or individuals violating rules or directives under the Act and causing harm to the securities market may face fines ranging from 500,000 to 2 million Nepali Rupees.

   • Provisions have also been made for compensating actual damages caused.

6. Penalties for Unauthorized Transactions:

   • Conducting securities transactions, central deposit services, or specialized investment fund operations without authorization may incur fines ranging from 500,000 to 2.5 million Nepali Rupees.

The amendment bill is expected to play a significant role in making the securities market more organized and transparent, and in protecting investor interests.