Regulations
SEBI slaps Rs60 lakh fine on two entities for fraudulent trading

SEBI said Krupa Sanjay Soni and Sanjay Soni sold shares in Shree Global Tradefin acting as a part of a group and thus profited significantly from the offloading

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs60 lakh on two individuals -- Krupa Sanjay Soni and Sanjay Soni -- for alleged fraudulent trading in the shares of Shree Global Tradefin Ltd (SGTL), reports PTI.

 

Probe carried out by SEBI revealed that SGTL share price recorded a jump of 31.8% in 163 trading days. The investigation covered the period from 23 March 2009 to 20 November 2009.

 

"The noticees (Krupa Sanjay Soni and Sanjay Soni) have net sold 32,810 shares of SGTL acting as a part of a group and thus profited significantly during the investigation period from the offloading of the shares," a SEBI order dated 14th September said.

 

The noticees (Krupa Sanjay Soni and Sanjay Soni) along with the other entities of Krupa Soni Group had dealt in the scrip of SGTL in a fraudulent and manipulative manner during the period under investigation that created false and misleading appearance of trading, artificial volume and price manipulation in the scrip, it said.

 

"... impose a penalty of Rs30 lakh each on the Noticees, amounting to a total of Rs60 lakh under Section 15HA of the SEBI Act...the penalty is commensurate with the default committed by the Noticees," the order added.

 

Considering the practices indulged in by them and the group entities, the order said the gains per se were made by the two noticees.

 

They traded in the scrip in a manner meant to create artificial volumes and liquidity which is an important criterion, apart from price, capable of misleading the investors while making an investment decision, SEBI added.

 

"... anyone could have been carried away by the unusual fluctuations in the volumes and been induced into investing in the said scrip. Besides, this kind of activity seriously affects the normal price discovery mechanism of the securities market," the order said.

 

Further, the regulator said information on record does not indicate that the violations of Krupa Sanjay Soni and Sanjay Soni are repetitive in nature.

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RBI issues guidelines on banks' illiquid assets

RBI guidelines require banks to make specified valuation adjustments for various risks or costs in their portfolios including derivatives, which are subject to 'mark to market' requirement and also for illiquidity of these positions

 
Mumbai: The Reserve Bank of India (RBI) has issued draft guidelines on prudent valuation of banks' long-term assets which are illiquid in nature, reports PTI.
 
"The prudent valuation adjustment for illiquid positions has assumed greater importance in the wake of the recent financial crisis," RBI said in the draft supplementary guidance.
 
"This guidance seeks to provide indicative guidelines to banks to define illiquid positions and subsequent valuation adjustments through Tier I capital," it said.
 
The guidance also contains certain additional valuation adjustment to be made to the derivatives portfolio, it said.
 
These guidelines require banks to make specified valuation adjustments for various risks or costs in their portfolios including derivatives, which are subject to 'mark to market' requirement and also for illiquidity of these positions.
 
The guidelines on which comments are invited till 19th October, permit banks to follow any recognised model or method for computing the amount of valuation adjustment.
 
RBI said that illiquid positions are generally disposed of at much lower price than the value reflected by banks in the books of accounts as per applicable accounting standards.
 
These concerns have become more pronounced after the financial crisis.
 
The recent market events such as large capital inflows or outflows, global financial crisis, large increases in government borrowings, frauds involving many active market participants in particular market segments leading to erosion of confidence in the financial markets, etc. could render the prices quoted a few days back or even the same day unreliable for fair valuation, it said.
 
Banks need to take into account such events while valuing their positions, it said.
 
Liquidation of large concentrated positions may result in adverse movement in the price the moment the off-loading starts, particularly when the market is not deep, it said.
 
Banks need to make a downward adjustment to the fair value of such positions reflected in the books of the banks, to reflect this uncertainty, it added.
 

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COMMENTS

Ramesh Poapt

4 years ago

RBI and PSU banks facing many odds.FinMin tryies to showcase goodie picture but the fact is quite reverse.Concealed deterioration has gone far away.make or break gamble is on...

Deduct bank guarantee of mine given to Hindalco, Tata Power: IMG

The IMG decided to recommend deduction of bank guarantee in the case of a mine jointly allotted to Aditya Birla Group's flagship company Hindalco and Tata Power due to delays in development of the block

 
New Delhi: Moving ahead with action against erring coal block allottees, the Indian government has decided to deallocate one more mine and deduct bank guarantees of two others even as the ministerial panel recommended forfeiture of bank guarantee of a block allotted to Hindalco and Tata Power, reports PTI.
 
The decision to de-allocate Gourangdih ABC coal block, jointly given to JSW Steel, a company owned by Sajjan Jindal, brother of Congress MP Naveen Jindal and Himachal EMTA was taken on the recommendation of the Inter-Ministerial Group (IMG).
 
The panel is scrutinising 29 out of 58 cases that were served show cause notices for non-development of mines during prescribed timeline.
 
"I have approved the IMG's recommendations given on Friday and will take a call on others," Coal Minister Sriprakash Jaiswal said.
 
The IMG, on Friday had recommended de-allocation of the Gourangdih ABC mine, given jointly to JSW Steel and Himachal EMTA, in 2009, having an extractable reserve of 61.54 million tonnes (MT).
 
With this the total number of blocks approved for de-allocation has gone up to five out of total seven recommended by the IMG so far. Government has also approved deducting bank guarantee (BG) in case of five mines out of total eight recommended by the IMG so far.
 
Meanwhile, the panel decided to recommend deduction of bank guarantee in the case of a mine jointly allotted to Aditya Birla Group's flagship firm Hindalco and Tata Power due to delays in development of the block.
 
"The IMG today recommended deduction of bank guarantee of Tubed coal block in Jharkhand, allotted to Hindalco and Tata Power in August 2007," an official source told PTI.
 
The panel could take up only Tubed block for scrutiny on Monday and would meet again on Monday to scrutinise another six of seven cases, which failed to adhere to the timeframe for developing the mines given to them, sources said.
 
The Tubed mine, which finds mention in CAG report, has an extractable reserve of 130 million tonnes (MT) and the coal from it was meant to be used for a power project.
 
The five mines approved by government for de-allocation are - Gourangdih ABC-- jointly given to JSW Steel and Himachal EMTA, Bramhadih in Jharkhand allocated to Castron Mining in 1996, Chinora and Warora (southern part) blocks in Maharashtra given to Fieldmining and Ispat in 2003, Lalgarh (North) block in Jharkhand allotted to DOMCO Smokeless Fuels in 2005.
 
As far as deduction of BG is concerned, government has accepted the IMG recommendation in case of Marki Mangli II, III and IV in Maharashtra allotted to Shri Virangana Steel in 2005, Lohari block in Jharkhand given to Usha Martin in 2005 and Nerad Malegaon in Maharashtra which was allotted to Gupta Metaliks & Power in 2006.
 
Besides, the government also gave nod to IMG recommendation for submitting bank guarantee by Monnet Ispat & Energy for Utkal B2 Block in Odisha allocated in 1999.
 
Some of these coal blocks find mention in the CAG report, which had recently estimated that the financial impact of the benefit to the private allottees will be about Rs1.86 lakh crore.
 
Meanwhile, the panel is meeting again on Tuesday to decide the fate of about six more coal mines allocated to private firms that were issued notices for delaying production.
 
The panel has so far scrutinised the replies furnished by 19 coal block allottees out of 29.
 
It earlier heard the coal block allottees, who were invited to make presentations from 6-8 September, and also obtained updated status paper from Coal Controller/Ministry of Coal.
 

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