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GTB scrip manipulation — SEBI probe to focus on old suspects

Jayanta Mallick

Kolkata , Aug. 10

THE Securities and Exchange Board of India is specifically looking for clues on whether the 14 entities, once suspected to have been involved in stock price manipulation and prohibited by the market regulator (from December 31, 2002 till June 11, 2004) against trading in the Global Trust Bank stock, had any prior knowledge of the financials of the beleaguered bank for the year ended March 31, 2004.

The bank announced the results for the financial year 2003-04 on Monday.

Highly placed capital market sources told Business Line that SEBI was also trying to find out whether these entities had established links with the promoters of the bank or whether they had prior information about the Finance Ministry and RBI's move to place the bank's operation under a moratorium, which was effected on July 24.

The sources insisted the SEBI and RBI decisions on GTB stock and moratorium were independent of each other and fall in the respective regulatory jurisdiction. They said that it was immaterial whether communications took place between the two regulators on the related subjects or not.

"The issue of insider information of a bank and its effect on the trading of the bank's stock is strictly in the domain of SEBI," a top banking source said.

The market sources also pointed out that systems were well in place by which a stock market entity, including a registered FII, is informed about any regulatory decision influencing its operations in the stock market.

Apart from the High Powered Committee on the capital market, there are various joint sub-committees of the two regulators, which serve as co-ordinating and information-sharing platforms for the regulators on the banks.

The moot question before the SEBI, was whether any individual or an entity had taken advantage of an "information leak" on the bank in trading its shares between June 12 and July 24 this year, market sources said.

In all respects, the current SEBI investigation into the GTB stock trading is a throwback into the 2001 scam probe. According to the report of JPC, which investigated the securities market scam of 2001, SEBI in its probe into the alleged manipulation in the GTB stock during 2000-2001, could not establish evidence of an alleged link between the bank's promoters, stockbroker Ketan Parkeh, his tainted entities and Zee Telefilms promoters.

Neither could the RBI be faulted for heavy fund flow from GTB to Ketan Parkeh and his entities.

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