Fiscal Nepal
First Business News Portal in English from Nepal
Shankar Group
KATHMANDU: A high-level investigation by the Securities Board of Nepal has uncovered a complex web of collusion involving intermediary Deepak Bhatta, broker officials, and prominent business figures to artificially inflate stock and debenture prices in Nepal’s capital market.
The probe committee, formed following concerns of insider trading and abnormal price movements, has concluded that Bhatta acted as the “mastermind” behind a coordinated scheme that manipulated demand, bypassed regulatory safeguards, and distorted price discovery mechanisms in both equity and debt markets.
According to the investigation report submitted on April 16 (Baisakh 3), Bhatt, in collusion with Bhirkuti Stock Broking Company Pvt. Ltd. and its CEO Sandip Chachan, orchestrated large-volume transactions without making the mandatory advance payments required under existing regulations.
Nepal’s brokerage rules require at least 25 percent upfront payment before executing trades. However, the report finds that Bhatt and associated investors conducted transactions worth billions of rupees with zero upfront capital, raising serious questions about broker compliance and systemic risk.
The network allegedly includes influential business figures such as Sulabh Agrawal, Raj Bahadur Shah, Rishiraj Mor, and Shekhar Golchha, among others.
Between July 21, 2025 (Shrawan 5, 2082 BS) and March 14, 2026 (Chaitra 1, 2082 BS), Bhatt alone purchased shares worth approximately NPR 3.80 billion and sold shares worth NPR 930 million—without settling payments to the broker.
The report indicates that an outstanding liability of nearly NPR 2.89 billion remains unpaid. Investigators suspect that the broker used funds from other clients—via netting systems—to settle Bhatt’s trades, effectively misusing investor funds.
The investigation highlights that coordinated trading created artificial demand, particularly in shares of Nepal Reinsurance Company. The stock price surged from NPR 1,461 per share on July 21, 2025, to over NPR 1,686 by August 26, 2025—without corresponding fundamentals or genuine market demand.
The report concludes that such price movement reflects clear market manipulation, violating core principles of fair trading and transparency.
Bhatt allegedly used a network of affiliated entities—including Infinity Holdings, Himalayan Reinsurance, Himalayan Capserv, and Nepal Micro Insurance Company—to execute circular trades.
These transactions involved buying securities at lower prices and selling them at inflated rates to entities under his direct or indirect control, thereby generating artificial profits and misleading market signals.
The manipulation extended beyond equities into the corporate bond (debenture) market. The report details how Bhatt engaged in coordinated trades of instruments such as NBLD 85 and SBLD 89.
For instance, Bhatt purchased debentures at NPR 1,080 per unit and sold them within a week to affiliated firms at prices ranging from NPR 1,100 to NPR 1,185. These firms—such as Guardian Micro Life Insurance, Crest Micro Life Insurance, and Protective Micro Insurance—were found to have ownership links with Bhatt.
Such transactions constitute circular trading and conflict of interest, distorting true market value and deceiving investors.
Further irregularities were uncovered in transactions involving Bhatt’s family. Investigators found that debentures purchased at lower prices were quickly offloaded to funds linked to his spouse.
In one case, Bhatt acquired NIMBD 90 debentures from Himalayan Reinsurance and sold them within days to the HLI Large Cap Fund, operated by Himalayan Investment Banker, where his wife reportedly has involvement.
This pattern of intra-network trading indicates a deliberate strategy to inflate prices and extract gains within a closed ecosystem.
A particularly alarming finding was that multiple trades across different accounts and institutions were executed from the same IP addresses, suggesting centralized control of trading activity.
This raises concerns that a single entity or group may have been orchestrating transactions across multiple fronts, undermining the integrity of Nepal’s trading infrastructure.
The investigation also identified instances of “paper trades,” where transactions were recorded without actual transfer of ownership. These were particularly noted among entities with overlapping ownership structures, including Himalayan Life Insurance and related financial institutions.
Such practices further reinforce the conclusion that the market was manipulated through coordinated, non-transparent activities.
The probe committee has concluded that the activities fall under serious violations of Nepal’s Securities Act 2007 (2063 BS), particularly Sections 94, 95, 96, and 98, which prohibit:
Given the severity of the findings, the committee has recommended forwarding the case to the Nepal Police for criminal investigation.
The report specifically names Deepak Bhatt and broker CEO Sandip Chachan as primary violators, while also identifying roles played by Sulabh Agrawal, Rishiraj Mor, Raj Bahadur Shah, and others. Financial flows from multiple institutions—including reinsurance firms, micro-insurance companies, and investment funds—were used to facilitate the scheme.
The investigation further notes that similar manipulation patterns were observed in stocks such as NLG Insurance and Guardian Micro Life Insurance, indicating a broader network of coordinated activity.
This case represents one of the most significant exposures of coordinated market manipulation in Nepal’s financial history. It reveals systemic weaknesses in brokerage oversight, regulatory enforcement, and risk management within the capital market ecosystem.
The findings are likely to trigger stricter regulatory scrutiny, potential legal action, and reforms aimed at restoring investor confidence in Nepal’s stock market.
Your email address will not be published. Required fields are marked *
Comment *
Name *
Email *
Website
Save my name, email, and website in this browser for the next time I comment.
