Citizens' Issues
SEBI to look into large-scale “pump-and-dump” of stocks

The pump-and-dump cases have been found to be quite frequent in certain mid-cap stocks, especially from the infrastructure sector. These stocks are mostly of those companies that have been in the news for problems relating to their funding plans

A large number of “pump-and-dump” activities in stocks have come under the scanner of the Securities and Exchange Board of India (SEBI), which suspects certain brokers and other entities of luring small investors into artificially high trade volumes.

 

The surge in these manipulative activities, known as “pump-and-dump” in market parlance as they involve sudden sale of shares after creating huge volumes with significant buying activities, has been noticed by SEBI’s Data Warehousing and Business Intelligence System (DWBIS).

 

The system has now begun providing “pattern recognition algorithms” to monitor the trade and order data received by SEBI in order to identify networked clients who possibly collectively indulge in violations of securities laws.

 

A senior official said that alerts of high materiality are being generated by the DWBIS, pursuant to which SEBI has detected possible market violations through activities such as pump-and-dump, insider trading and front running.

 

The pump-and-dump cases have been found to be quite frequent in certain mid-cap stocks, especially from the infrastructure sector, he added.

 

These stocks are mostly of those companies that have been in news for problems relating to their funding plans, the official said, but did not specify the names. The modus operandi generally starts with huge buy orders alongside circulation of positive news about resolution of long-pending problems at those companies, followed by large- scale sale of the same shares at a later stage, he said.

 

Besides detecting the possible cases of market manipulation, SEBI’s DWBIS tools are also helping it to build linkages between various transactions and activities of the networked entities.

 

The official said that DWBIS is providing SEBI with a capability to query and perform analytics on vast amounts of data and obtain the desired output in a timely manner. SEBI has so far implemented two phases of the ambitious DWBIS project and the third phase is currently being tested for live implementation and the tools available in this system are proving very useful in catching the manipulators at an early stage, the official said.

 

The first phase was implemented in early 2011 for speedy analysis of data and identification of possible violations by use of modern technology in terms of computation.

 

The third phase would help SEBI meet data requirements of its research department. This phase would incorporate in-house and outside data related for research purposes, such as financials of companies, transactions, primary market data, mutual funds, corporate actions, take over and buyback information.

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COMMENTS

Vaibhav Dhoka

4 years ago

Final looser is small time investor.He is always on receiving end.This is one reason why small investors are moving away from stock market and Mutual fund.

DoT to hold third round of 2G GSM spectrum auction shortly

The Supreme Court has ordered the auction of entire spectrum that was vacated by 122 2G telecom licences that court had cancelled on 2 February 2012

The government will conduct the third round of 2G GSM spectrum auction immediately after the bidding for the radiowaves ends in March in compliance with last week’s Supreme Court order.

 

In the ensuing auction, the government will put up the spectrum that was left unsold in the November round of bidding. Once that is over, the government will start auction of the radiowaves that were freed up after the cancellation of telecom licences last year but were not put on auction in the last round.

 

“We will put all the spectrum in the 18 circles which was not auctioned in November for auction immediately after this (March auction) is done,” telecom secretary R Chandrashekhar said.

 

The Supreme Court has ordered the auction of entire spectrum that was vacated by 122 2G telecom licences that court had cancelled on 2 February 2012.

 

As a result of the cancellation of licences, 514.8 Mhz of spectrum was freed up, but the government only kept 271.25 Mhz of spectrum for auction in November 2012.

 

Last week, on 15th February, the apex court directed the government to auction “entire spectrum released as a result of quashing of the licences on 2 February 2012... without further delay”.

 

Chandrashekhar said that Department of Telecom ( DoT) is considering to increase the quantum of spectrum in Karnataka and Rajasthan cirlces for which auction is scheduled to start from 11th March to comply with apex court order.

 

The government has announced auction of 10 MHz each in Karnataka and Rajasthan, but spectrum freed from cancellation of licences in these circles was 22 Mhz and 17.6 Mhz.

 

“As far as Delhi and Mumbai are concerned, the quantum of spectrum is already compliant with the Supreme Court order of 15th February,” Chandrashekhar said.

 

He said all spectrum which was released by cancellation of CDMA licences (800 MHz band) has been already put up for auction.

 

The government has announced that it will auction 15 MHz of radiowaves each in Delhi and Mumbai in the 1800 Mhz band, currently used for 2G GSM services, whereas 4.4 Mhz and 13.2 Mhz was released through quashed permits respectively.

 

The telecom secretary said that apart from increase in quantum of spectrum, there is no change expected in March auction.

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SEBI imposes Rs10 lakh penalty on individual in Ind-Swift Lab case

A probe by SEBI revealed Balwinder Singh had indulged in executing wash trade/self trades/fictitious trades in the scrip of the company from 1 August 2010 to 31 August 2011

The Securities and Exchange Board of India (SEBI) on Monday imposed a penalty of Rs10 lakh on an individual for alleged fraudulent dealings in shares of Ind-Swift Laboratories.

 

The market watchdog slapped a fine of Rs10 lakh on one Balwinder Singh and said that the penalty is “commensurate with the violations committed by him”.

 

“...It is established beyond doubt that the noticee had indulged into wash trade/self-trades/fictitious trades which are manipulative/unfair/fraudulent in nature,” SEBI said in an order.

 

A probe by SEBI into the alleged irregularities in the trading in shares of Ind-Swift Laboratories revealed Singh had indulged in executing wash trade/self trades/fictitious trades in the scrip of the company from 1 August 2010 to 31 August 2011.

 

These trades, the regulator, said were in violation of the norms on prohibition of fraudulent and unfair trade practices.

 

The regulator said that Singh is the proprietor of Gogia Investments, a registered sub-broker of Kotak Securities at NSE and BSE.

 

According to SEBI, Singh had traded in the scrip of Ind-Swift Laboratories through three different brokers including Kotak Securities at both BSE and NSE.

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COMMENTS

Shantha

3 years ago

Hello, It looks many companies will take path of Birla Power, IndSwift, Micro Technologies, OmniTech, etc., All the money invested is being used by the Company for finding route to cheat the poor investors. If Govt Of India, RBI and regulatory agencies are not going to take control of the situation soon all companies will use the option ...why to pay-back the deposits, Govt regulation has a big hole ...better use it and ask for 10 years or 20 years as per wish to pay. Small investors are advised by Bajaj Capital, Blue Chip, Integrated Investments, IIFL and other companies to do deposits in these companies...say they have lots of research and then only recommend to invest. Now many companies are not paying the interest or principal invested....

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