Regulations
Finally, penny stock manipulation under CBDT scanner, even as SEBI sleeps
Moneylife has been highlighting rampant manipulation in penny stocks for the last seven years, but there has been no action by SEBI. The CBDT has now been forced to issue a direction seeking information on investment in penny stock where prices were rigged
 
The Central Board of Direct Taxes (CBDT) has issued instructions to carry out detailed enquiry of taxpayers who had invested money in penny stocks, whose share prices were artificially raised for booking bogus claims of long term capital gains (LTCG) or short term capital loss (STCL) by various beneficiaries.
 
The order issued on 16 March 2016, says, "...the said instruction is in the context of investigation conducted by Kolkata Investigation Directorate in respect of large number of penny stock companies, whose share prices were artificially raised on the Stock Exchanges in order to book bogus claims of long term capital gains or short term capital loss by various beneficiaries. Extensive investigation, including search and seizure/ survey action on entry providers, riggers, beneficiaries etc. was conducted by the Investigation Directorate in such cases. Based upon outcome of such investigation and analysis of the data, the Systems Directorate has now uploaded details of such information in respect of individual assessees who have made transactions in such penny stocks."
 
"Vide EFS Instruction under reference a new button 'Penny Stock' has been added on Individual Transaction Screen (ITS) to display information related to penny stock, now enabled on the screen of the Assessing Officers (AOs). Available information regarding the manipulative transactions has been captured in the functionality, including the investigation report of the Kolkata Investigation Directorate. The functionality also contains a guidance note for the Assessing Officers. Such details are visible to the AOs of those assessees whose particulars have emanated out of the investigation report of Kolkata Investigation Directorate and whose cases have been considered actionable, at this stage. The details are also visible to supervisory officers of such AOs," the order says.
 
Moneylife routinely writes about many such stocks, in the every issue of the magazine’s Unquoted section (http://www.moneylife.in/markets/unquoted), where stock prices either have rocketed or cratered without any respect to stock fundamentals. Moneylife also carried an exclusive Cover Story in 2012 (http://www.moneylife.in/article/stock-manipulation/27957.html), which saw many stocks rising and falling right under the nose of Securities & Exchange Board of India (SEBI).
 
However, the latest directions from CBDT follow a 'secret' letter from Shaktikanta Das, then revenue secretary, to the SEBI Chairman. In this letter sent last year, Mr Das has informed the SEBI Chairman about "investigation carried out by the Income Tax Department (ITD) showing regulated securities or commodities market mechanism being misused for large scale systematic tax evasion and round tripping of unaccounted funds... to generate fictitious LTCG."
 
"Such rampant manipulations call for concerted and coordinated action by the agencies concerned. SEBI's proactive role in the above context is crucial," Mr Das has written in the letter.
 
In December 2013, the SEBI Board approved the SEBI (Procedure for Search and Seizure) Regulations, 2013, made on the lines of the provisions in the Income Tax Act, 1961 and for providing the detailed procedures for such search and seizures by SEBI. This conferred direct powers on SEBI chief to authorize the investigating authority or any other officer of SEBI to search any premises where incriminating documents are lying and seize such documents for the purpose of investigation. The Ordinance also empowers SEBI to make regulations for executing the search operations and to ensure safe custody of any books of account or other documents that are seized.
 
However, nothing much happened despite SEBI gaining such powers.  
 
In his letter, Mr Das further stated, "Investigations conducted by ITD in the transactions of the aforesaid nature could not bear the desired fruits inter alia for the reasons that in most of such transactions the regulators concerned such as SEBI did not record any adverse finding qua such transactions. Judicial authorities have held that unless the corporate veil is lifted, onus on revenue is not discharged. The action taken by SEBI in such cases unravelling the facade is of critical importance, in these cases for effective handling of menace of bogus LTCG."
 
Mr Das also highlighted the time limit on such cases. "...income-tax Act, 1961, prescribes time limits within which assessments can be completed and tax demands can be raised. Therefore, timely action from SEBI in such cases would help in ensuring appropriate actions by the Income Tax authorities. SEBI may take note of violations of KYC norms by the stock brokers for further appropriate action," he concluded.
 
Earlier, in 2014 and 2015, SEBI had grandly claimed that it has busted schemes, which misuse the stock market platform for money laundering. Obviously, what SEBI claimed as a huge crackdown on those two occasions, hardly scratched the surface. 
 
Last year, to check market manipulation through penny stocks, the market regulator came up with and idea to create a new group T+ for scrips that are found to be prone to market manipulation. 

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COMMENTS

Ramesh Poapt

11 months ago

one more good one from ML!!!

Vinayak Bhimrao Mudholkar

11 months ago

Will genuine traders/investors in small/micro cap segment be harassed?

Even bumblebees don't like to share expertise with newcomers
London : You may compare this with human attitude to a certain extent but when it comes to well-qualified bumblebees, they do not like sharing their pollinating knowledge with the less experienced bees and even attack newcomers in the field, researchers report.
 
The study focused on whether bees can copy other bees' flower visitation sequences in the field to improve their foraging and to show how animals with relatively simple brains find workable solutions to complex route-finding problem.
 
"Like other pollinators, bees face complex routing challenges when collecting nectar and pollen. They have to learn how to link patches of flowers together in the most efficient way to minimise their travel distance and flight costs, just like in a travelling salesman problem," explained lead author Mathieu Lihoreau from thd Queen Mary University of London (QMUL) in Britain.
 
The findings, published in the journal PLOS ONE, revealed that though the newcomers tried to copy the choices of seasoned foragers, the more experienced bees really didn't appreciate being copied.
 
"We wanted to monitor the way bumblebees behave when they bump into each other at flowers -- would they compete, attack each other, or tolerate each other?" added Lars Chittka, one of the authors.
 
The team set up one of the largest outdoor flight cages ever used in bee research and installed a range of artificial flowers, fitted with motion-sensitive video cameras which had controlled nectar flow rates for the bees to visit. 
 
The researchers then allowed two bees in at a time: One more experienced resident, and one a newcomer. 
 
While the newcomers did try to copy the choices of seasoned foragers, the more experienced bees really didn't appreciate their behaviour and frequently attacked the newcomers and tried to evict them from flowers.
 
"Our study is the first to examine the foraging routes followed by multiple bees at the same time. Responses to intense initial competition between bees for nectar could explain how pollinators gradually learn to visit different patches of flowers across the landscape," Lihoreau commented. 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Electric buses daily earn 82 percent more profit than diesel vehicles
Electric buses generate 27 percent more revenue and 82 percent more profits than diesel buses per day, according to an Indian Institute of Science (IISc) study evaluating electric vehicles for urban transport.
 
The findings have special significance because primary mass transit in Indian cities is provided by 150,000 diesel buses, held responsible for contributing to urban smog and carbon emissions that are warming the planet.
 
As much as 25 tonnes of carbon dioxide (CO2) emission can be cut every year for every diesel bus replaced by an electric bus, said the IISC study, conducted by Sheela Ramasesha and her group at the Divecha Centre for Climate Change in Bengaluru. Electric buses emit no CO2, but the electricity needed for their charging stations comes primarily from coal-fired power plants, India’s primary energy source.
 
However, if solar panels are set up at the battery charging stations, the annual 25 tonnes of CO2 emission per bus can be further reduced. Put another way, if 150,000 diesel buses were to be replaced by electric buses, 3.7 million tonnes of CO2 emissions could be saved.
 
Apart from reducing outdoor air pollution - which kills 670,000 people in India every year, according to an Indian Institute of Management-Ahmedabad paper - a clean bus system would aid national carbon-reduction targets. Transport accounts for a tenth of India’s greenhouse gas emissions, as we have previously reported, with a 2009 study attributing 95 percent of these emissions to road transport.
 
India is now the world’s fastest-growing major polluter, as we have previously noted, contributing to almost a third of global emissions' growth in 2014.
 
Electric bus tested made environmental and economic sense
 
Using a Chinese-built electric bus provided for a three-month free test run to the Bangalore Metropolitan Transport Corporation (BMTC) - India’s largest and most-efficiently run bus fleet - Ramasesha and her colleagues ran their tests on a pre-existing route with an average daily travel of less than 200 km (the bus’ battery could run 215 km before recharge).
 
They compared economics and environmental impact of the electric bus with a diesel bus on the same route over a period of 93 days in 2015.
 
The electric bus was not just cleaner for the environment but also made economic sense. The revenue generated by both buses was almost the same while profits, as we said, were 82 percent higher. This is because the maintenance and variable costs of an electric bus are lower than its diesel cousin and its energy efficiency is higher.
 
The only downside of the electric bus is its relatively high price - Rs.30,00,000 ($45,000) vs Rs. 8,50,000 for a diesel bus - which could reduce if electric buses are manufactured in India. The bus used for the tests was imported from China.
 
The electric bus was an easy winner, emitting about 50 kg less CO2 per day than the diesel bus. The diesel bus emitted 77 tonnes of CO2 every year.
 
The role of diesel heavy vehicles in carbon emission
 
Diesel-powered buses and trucks contribute higher CO2 than lighter motor vehicles powered by petrol, a study in the journal Atmospheric Environment said in 2009.
 
In 2010, India and 21 other Asian countries committed to more sustainable transport fuels and technologies, “low-carbon transport initiatives to mitigate the causes of global climate change and to fortify national energy security”.
 
Despite the high initial investment, the absence of tailpipe exhaust fumes, silent running, and lower idling motor energy losses at bus stops or traffic signals could make the electric bus one of those technological options for urban India.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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