Financial Daily from THE HINDU group of publications
Thursday, Sep 19, 2002
Financial Daily from THE HINDU group of publications Thursday, Sep 19, 2002 |
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Regulatory Bodies & Rulings Markets - Economic Offences Amara Raja case: 2 cos held guilty C.R. Sukumar
HYDERABAD, Sept. 18 IN a significant development pertaining to price manipulation in the scrip of Amara Raja Batteries Ltd (ARBL), the Securities and Exchange Board of India (SEBI) has decided to suspend two of the stock broking firms registered on the Bombay Stock Exchange (BSE) after finding them guilty of violating the provisions of SEBI (stock brokers and sub-brokers) Regulations, 1992 and SEBI (prohibition of fraudulent and unfair trade practices relating to securities market) Regulations, 1995. The two brokers — Orient Share & Stock Brokers Ltd and Sharedeal Financial Consultants Pvt. Ltd — were found guilty of price manipulation during the period from August 2000 to March 2001. The market regulator conducted a detailed investigation into the role played by these brokers in the price manipulation case and found that they had violated the provisions of the SEBI Regulations. After going through the report submitted by the SEBI Enquiry Officer that confirmed that the brokers were found guilty of violating the provisions, the market regulator gave an opportunity of personal hearing to both the stock broking firms. In a press release, SEBI said it found the two brokers guilty of violating the provisions. While Orient Share was suspended for a period of six months, Sharedeal Financial was penalised for a period of nine months, the release said. Earlier, in the case of ARBL share price manipulation case, SEBI had warned a member broker of the National Stock Exchange (NSE) — Seshanka Securities Pvt. Ltd — and suspended the registration of Kanan Securities, sub-broker to Shreepathi Holdings & Finance Ltd, a member of NSE. The share price of ARBL, which was in the range of Rs 91 in the first week of October, 2000 on BSE, went up to Rs 205 on January 1, 2001 and further touched a high of Rs 320 on March 8, 2001. According to SEBI, the ARBL scrip closed at Rs 308.40 on March 9, 2001 at 2 p.m. on BSE. The trading at BSE was closed early to facilitate the badla session. On the same day, NSE was functioning till 4.30 p.m. and the price of ARBL scrip fell to Rs 266.75. Keeping this in view, BSE adjusted the prices of various scrips on March 12, 2001 to that of NSE including ARBL. Later, the prices of ARBL fell further and touched a low of Rs 78.50 on March 19, 2001. It was also found that the volumes in the scrip of ARBL, which were around 50,000 to 60,000 per day during October 2000, went up to around eight to 15 lakh shares per day in February 2001 and first week of March 2001 at both BSE and NSE. The average trading in the scrip of ARBL from January to March 2001 went up to the extent of 10 to 15 lakh shares per day and this constituted about 30 per cent of the free floating stock of ARBL. Following complaints that the scrip was subjected to market manipulations and irregularities in trading, SEBI ordered a detailed investigation into the issue. The SEBI investigations revealed that various members of BSE and NSE had aided and abetted certain brokers in creating a false market in the scrip of ARBL.
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