SEO, Judiciary Sign MoU to Curtail Stock Market Abuse

EghtesadOnline: Amemorandum of understanding was signed between the Securities and Exchange Organization and the judiciary’s Social And Crime Prevention Department to minimize abuse and misdemeanors in Iran’s rapidly growing capital market.

News ID: ۷۵۰۰۹۸

21 May 2020

It was signed by the newly appointed SEO’s chief Hassan Qalibaf-Asl and Mohammad Baqer Olfat, head of the SCPD late Tuesday, Securities and Exchange News Agency reported.

The MoU’s focus on identifying corruption loopholes in the bourse, improving transparency and raising investors’ awareness about the possible misdeeds, like insider information and price manipulation.

The judiciary will set up special tribunals to look into accusations of offences in the stock market.

Both sides agreed to share information and experience in relevant fields.

On the importance of investment in stocks and its increasing traction for the general public, Qalibaf-Asl said the market “needs special caution which is the function of the SEO.”

“Investment in stocks is advantageous for the economy... a robust bourse underpins economic prosperity,” the CEO said.

Pointing to factors threatening the safety of investments, he stressed the need for protecting investors’ information and preventing price manipulations.

Public Trust

Speaking on the sidelines of the signing ceremony, Olfat said both organizations cooperating to minimize risks related to the stock market and safeguard investors’ trust.

“Economic crime in the banking, tax, and capital market sectors can irreparably harm public trust,” he was quoted as saying.

Ja’far Jamali, the SEO deputy for legal affairs, said the stock market regulator has set up two offices within the organization to improve transparency and protect investors who have fallen victim to stock market fraud.

“One office is for promoting transparency, which also aims to improve market efficiency and raise investors’ awareness of risk management and [possible] stock market offences”.

The other is a “restorative justice center” to help maintain security of business and protect victims of potential offence.

Restorative justice brings those harmed by crime or conflict and those responsible for the harm into communication, enabling everyone affected by a particular incident to play a part in repairing the harm and finding a positive way forward.

Efforts to improve security of investment in shares is spurred by the increasing attention of the public to the market and the dramatic rise in the people’s investment in the fast-growing market.

In an earlier statement, Qalibaf-Asl said an estimated 450 trillion rials ($2.7 billion) in liquidity poured into the stock market from the beginning of the fiscal year (March 20) until May 15.

“This is almost 50% of total liquidity channeled into the market throughout the last fiscal year [March 2019-20].”

In recent months there has been an unusual increase in the number of new investors in the bourse. Brokerages issued 1.6 million trading codes for new investors in little less than two months since the beginning of the fiscal year compared to the total 822,000 codes issued in the last fiscal year.