EghtesadOnline: Lawmakers on Tuesday approved a proposal from the Majlis Economic Commission to investigate the historic stock market decline plus the performance of its regulator, the Securities and Exchange Organization.
Investigators will look into developments in the Tehran Stock Exchange early in the last fiscal year that led to the unprecedented hike in share prices in five months followed by the historic plunge that has almost continued until today.
MPs also want to investigate the relevant authorities approach to the issue as well as the frequent changes in SEO management, which, some lawmakers say, at times failed to uphold administrative formalities, the parliamentary news website, ICANA, reported.
Reading the commission’s report, MP Gholam-Reza Marhaba said the benchmark of Tehran Stock Exchange lost more than 30% in recent months inflicting billions in losses to shareholders.
Backing the investigation, another lawmaker, Nasser Mousavi Largani, underlined the significance of the parliamentary probe, recalling that the people were encouraged to buy shares without proper financial training.
“Why the people were encouraged to join the bourse in millions, without financial literacy or training, and whether it was the former government’s attempts to fix its budget deficits are issues the investigation will pursue,” he was quoted as saying.
Data released by the Central Securities Depository of Iran show that more than 8.83 million trading codes were issued for new investors in the first half of the last fiscal year (March-Sept 2020) -- an unusual number compared to the less than 12 million issued in more than a half a century.
Riding on the fresh liquidity flowing into the share market by novice investors, the TSE’s main index, TEDPIX, jumped 300% in less than five months and crossed the historic high of 2.1 million points in the summer of last year.
Full Reverse Mode
Triggered by huge sell-off by institutional traders, the stock market bubble burst as the TEDPIX went into an abrupt and full reverse losing half its value leaving millions of retail traders in the red and with little, if any, recourse.
The parliamentary investigation will look into procedures that led to the appointment of Mohammad Ali Dehqan-Dehnavi, the former SEO boss in January.
Some MPs claim he was appointed by the then Economy Minister Farhad Dejpasand without observing binding formalities.
Referring to the relevant regulations, MPs say the head of SEO must be selected from the board of directors of the organization. Dehqan-Dehnavi was not one of them.
He took office after his predecessor Hassan Qalibaf-Asl tendered his resignation amid steep market volatility and mounting street protests by investors most of whom lost their life savings.
He stepped down after the High Council of Securities and Exchange in October appointed Majid Eshqi as the new managing director.
Under the unstable climate the SEO has seen three managers in the past year and a half. This is while ten heads presided over the organization in its half century history.