Sebon Fines Care Ratings for Violating Law

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Sebon Fines Care Ratings for Violating Law

September 20: The Securities Board of Nepal (Sebon) has decided to impose a fine of Rs 50,000 on the rating agency Care Ratings Nepal. A meeting of the board of directors of Sebon on Tuesday decided to impose fine after concluding that the agency made ratings violating the law.

Sebon has been taking action against market-related entities that work against the law, but this is the first time that action has been taken against a rating agency.

Sebon’s Board of Directors meeting on January 8 had decided to seek an explanation from Care Ratings for violating the Credit Rating Regulation 2068 and rating its main shareholder. The board asked for an explanation from Care Ratings, whose main investor is Vishal Group, for rating the bank loans of other companies established with investment from the same group.

The board decided to take action eight months after asking for an explanation. Care Ratings also rated the most controversial Ghorahi Cement’s IPO. Vishal Group is also the main investor in Ghorahi Cement.

Care Ratings has rated United Distributors, Asian Distributors, VG Automobiles, Mainavati Steel, Global Trading Concern and other companies under Vishal Group.

Rating should be done by evaluating the overall condition of the companies in order to help the common investors to be aware of the securities transactions. If any company is rated in violation of securities laws, Sebon can impose a fine of Rs 50,000 to Rs 200,000. Sebon sources said the regulatory body decided to penalize Care Ratings accordingly.



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