Kathmandu, April 22: A probe by the Securities Board of Nepal (SEBON) has found that funds of insurance companies were misused to manipulate the stock market, prompting a recommendation for further investigation by Nepal Police.
The Board’s supervision department concluded that a group led by businessman Deepak Bhatt used nearly Rs 4 billion from insurance companies to influence share prices. These companies, being public limited entities, pool large sums from the public through investments and insurance premiums, raising concerns about the misuse of public money.
According to the report, Bhatt and his associates used insurance companies in which they held significant stakes to channel funds into share trading. The scheme involved buying shares cheaply from individuals and private firms, inflating their prices, and then selling them to insurance companies under their influence. The report also noted that shares were often purchased on credit in the names of individuals and private entities.
The investigation identified Bhatt and Sandeep Chachan, CEO of Bhrikuti Stock Broking Company, as key actors. The Board concluded they violated provisions of the Securities Act, 2007, including sections related to market manipulation and fraudulent transactions.
The report named several entities and individuals as facilitators, including Himalayan Reinsurance Company, Himalayan Capserv, Nepal Micro Insurance, Himalayan Securities Banker, HLI Large Cap Fund, Rohit Gupta, and Shekhar Golchha. It also found Shubhi Agrawal, Rishiraj Mor, Raj Bahadur Shah, and Himalayan Life Insurance involved in artificially boosting the share price of Nepal Reinsurance.
The Board has recommended that Police Headquarters investigate these individuals and entities. It has also urged the Insurance Authority and the Department of Money Laundering Investigation to conduct further inquiries.
Investigators found that the group would first acquire shares, inflate their value, and then pressure public companies, especially insurance firms, to purchase them. The report states that Bhatt’s group carried out credit-based share transactions worth Rs 3.80 billion.
A significant portion of these transactions remains unpaid. Bhatt alone owes Rs 2.89 billion to Bhrikuti Stock Broking, while Raj Bahadur Shah owes about Rs 897 million. Shubhi Agrawal has outstanding dues of Rs 628.9 million, and Rishiraj Mor owes Rs 230 million. The Board described the scale of unpaid liabilities as abnormal, noting that trading limits were extended without advance payments and securities were credited despite non-payment.
The Board’s executive committee decided last week to recommend action against the identified irregularities. Following approval of the report, Nepal Police is expected to proceed with further investigation.
Calling the move a significant step for market discipline, a Board official said strict enforcement could help restore order in the capital market.
The Board has already suspended Bhrikuti Stock Broking Company for its role in the معاملات. It also decided to forward the report to police for further investigation into additional violations by Bhatt, including false transactions and market manipulation.
Similarly, the Board recommended action against Shubhi Agrawal, Raj Bahadur Shah, and Rishiraj Mor for offenses under relevant provisions of the law. It also decided to refer Himalayan Investment Banker and Himalayan Life Insurance for alleged violations, along with several other firms linked to transactions involving NLG Insurance shares.
The report further highlighted coordinated efforts by multiple entities to inflate the share price of NLG Insurance. The Board concluded that these activities distorted the securities market and warranted detailed police investigation.
People’s News Monitoring Service
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