Sebi bars 39 entities for price
rigging
TNN Feb 3,
2011, 05.33am IST
MUMBAI: Among the investing
community on Dalal Street, it's believed that a large number of speculators
indulge in circular trading- trying to push up a stock, lure gullible investors
to buy those scrips and then quietly exit, leaving investors with dud stocks.
Late on Wednesday, market regulator Sebi banned 39 such entities from the
market for indulging in circular trading in Spectacle Infotek, Goldstone
Technologies, Gemstone Investments, LGS Global and Well Pack Papers &
Containers. The order followed a detailed investigation in these stocks and
their price movement between 2008 and 2010, the market regulator said.
The investigation report pointed out that several of these entities are
linked to each other, through directorships in the same company, introduction
during the mandatory "know your client (KYC)" verifications, have
common telephone numbers, and some have even furnished the same email id in KYC
form. The Sebi investigation found there were 196 members within the
Walmiki-Shah group and 43 in the Pabari-Parikh group, and identified 39
entities which were the core members.
Sebi barred 39 entities from
accessing the stock market, and also prohibited them from buying, selling or
dealing in shares. The regulator also asked the stock exchanges to square off
any existing futures & options position these entities have.
In all these counters, Sebi order showed these entities bought large
quantities of the stock, created artificial volumes by trading among themselve,
and once unsuspecting investors also bought these stocks, these entities dumped
these scrips to make substantial profit. For example, a group of entities named
by Sebi as Walmiki-Shah group, manipulated the share price of Well Pack Papers,
in which another group, named here as Pabari-Parikh group, played a supporting
role. "Their roles were reversed in the trading observed in the share
(price) of Gemstone," the order pointed out.
Interestingly, in the 64-page order, Sebi has pointed out previous
violations of market rules by several of the entities banned, thus showing some
of these entities are regular market offenders. For example, Anand Marathe was
found to have indulged in suspicious banking transactions and had a role in the
Pyramid Saimira Theatre case. Marathe is already banned from the market by Sebi
in the Pyramid Saimira case. None of the entities banned by Sebi are much known
or big entities in the market, a dealer with a local brokerage pointed out.
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