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Insider trading: Why has it taken SEBI so long to wake up?

Recent media reports suggest that the market regulator has ‘enhanced its surveillance’ for possible violations of rules prohibiting insider trading. However, despite the repeated instances of price manipulation and insider trading that we have constantly been trying to highlight, SEBI has chosen to look the other way

It does not get any more bizarre than this. According to a senior official from market watchdog Securities and Exchange Board of India who spoke to the media yesterday, "SEBI has enhanced its surveillance for possible violations of rules prohibiting trading based on prior and inside information."

There's more. According to the market regulator, it has come across "over two dozen instances of major suspected violations of insider trading norms during the recent rally to new record levels above 21,000 level (sic) and the subsequent correction last week."

While it is extremely heartening that SEBI has woken up to this menace, readers of Moneylife know that we have been constantly highlighting cases of insider trading and price manipulation for over two years now.

But no action has been taken against these companies which have wilfully thrown regulatory norms to the winds.

It is well within the regulator's purview to have taken suo moto action against the cases that we have been repeatedly highlighting. But the silence has been deafening.

Here are just a few instances of naked manipulation in a few scrips. We have decided to highlight only those cases which we have unearthed this year, for brevity.

Company Stock surge* Link*
Veritas India 3227%
Polygenta Technologies 2190%
Prism Informatics 3149%
Westlife Development 4307%
Nikki Global Finance 1169%
Neha International 1509%
Supertex Industries 4140%
*(Please click on the link for the exact period during which the stock price has zoomed)

ML Bhakta from Kanga & Co has written to Moneylife articulating what a number of investors would feel: "I still wonder whether SEBI will ever wake up to the problem faced by unsuspecting investors - the sudden rise in prices of unknown scrips without any logic or reason, particularly when Moneylife is repeatedly pointing out instances of such cases."

SEBI's senior official (who has not been identified) told reporters: "While the suspicious trading activities have been noticed in SEBI's routine surveillance of market activities, the regulator has decided to probe further into these cases (the ones that SEBI has noted, not the ones Moneylife has been constantly unearthing) and enhance its oversight for such matters going ahead."

"Suspicious activities have been noticed in many other shares also but those are minor (emphasis ours) in terms of trade value and nature," added this official.

But this is another contentious statement. If SEBI had indeed "noticed" suspicious activities in other shares, why has it chosen to ignore them, in its own words, because they are "minor in trade value and nature"; shouldn't the regulator come down hard on each and every case of market manipulation, irrespective of the number of shares, size of the company and value of transactions?

As per SEBI's 'Prohibition of Insider Trading Regulations', an 'insider' is defined as any person "who is or was connected with the company or is deemed to have been connected with the company, and who is reasonably expected to have access to unpublished price-sensitive information in respect of securities of a company, or who has received or has had access to such unpublished price sensitive information."

The regulator supposedly has systems in place to monitor unusual stock trends; suspicious activities are supposed to be probed further for violations of norms - including those regulating insider trading.

But by the looks of it, the free-for-all insider trading might continue unabated - if the powers-that-be don't wake up.




6 years ago

Prism Informatics is completely fraud firm.I am not sure why SEBI is not taking any action. This company is being taken over by another fraud firm called Idhasoft. They claim that they have acquired to date 35 compinies. But these 35 compinies are just on paper company and there are too much inconsistency.


7 years ago

SEBI can do nothing to the Bank Distributors who only miss sell Mutual fund.SEBI can oly do is kill the inocent hardworking IFA's


7 years ago


Krupal K G

7 years ago

Sebi should bring all the new listing companies under T series till price discovery is over, or else they be included in pre-opening order entries and after the price discovery be put under regular circuit filters. New companies that are entering with premiums has to give buy back assurances to the successful allot tees upto a defined time after the listing. Also, before permitting the listing the merchant banker to the issue should settle all the pending issues like lapses in the allotment, refund orders and even the payment of brokerages to the Broker. Now, after the listing the grievances are not attended to in time.


7 years ago

I am very sad to see that Moneylife has removed 2 topics related to mutual funds where we brokers has been very critical about SEBI and we thought moneylife was doing great job by supporting us-but it seems ML has acted on same lines like other paid media by removing those pages-this is going to hit credentials of ML as a dedicated journalism-we IFAs had high hopes but i am sad to see this



In Reply to Roopsingh 7 years ago

Dear Roopsinghji,
By saying "ML has acted on same lines like other paid media by removing those pages", you have insulted the integrity of Moneylife team. The same team is standing tall in order to protect common investors and in fact had to pay a big price for it. MDT does not easily get invitations and responses from companies with maligned interest and so on. But we keep our motto intact.
As Mr Basu has pointed out, we have certain space limitations on the homepage and hence cannot post each and everything on it. As new stories are uploaded, old stories moves on to inside pages. This is generic to all media sites.

Debashis Basu

In Reply to Roopsingh 7 years ago

1. Nothing has been removed from the site
2. One of the items you are referring to is here
The other one is also there, if you search
3. Not everything cannot be in the home page forever
4. How is it that you start accusing us once you have the slightest suspicion, without giving us the benefit of doubt ? What does it say about your mind?
5. Now that you have abused us, you should consider not posting here again


In Reply to Debashis Basu 7 years ago

Dear Debashisji,Madam Sucheta and whole of MDT,-
i have always been agreat fan of you all-that was the reason i went to meet you all and see personally travelling from Surat many months ago-because i had read your articles which were very offline and based on ground realities and very much in support of the deprived(and this is continuing is a relief),
i just wanted to meet the people who were working with great courage against a established system with limited resources without back up of any industrial or corporate house,
i remember the article headline "CAN SEBI BE HELD ACCOUNTANBLE FOR TURMOIL"-these courageous words made me emotion to meet the people behind these words -so i came to mumbai to just meet them personally,
i have no doubts about good intentions with which you all are working but sometimes some silly mistakes from either end craetes some misunderstandings.
putting those pages which i meant removal have been re entered is a good surprise-i was worried about this because many of IFAs were having continuous exchange of thoughts and planning to make protests and we even pointed about misdeeds of AMCs-
i hope your editing team will remove only those pages which are exhausted and lost interest of readers.
Thanks a lot for all support we have received from you all and very very sorry if i hurted with no intention of doing so.
with all respect i admire all your efforts and hope this support will continue for all those who are sufferers to the established system.


In Reply to Roopsingh 7 years ago

you continue to insist that the pages were removed and re-entered. We are pointing out that nothing was removed. pages simply go off the front page and you need to search for them.
you must make an attempt to learn how internet websites work.
Most importantly, we have no reason at all to remove the pages -- unless you can think of some reason / interest that could possibly apply, why not refrain from jumping to conclusions and making allegations? this is not the first time you have done it.


In Reply to Debashis Basu 7 years ago

Dear Debashishji,
I am really tired of writing on comments without any fruitful outcome since last couple of months-writing is not my earning like yours-considering my self as a very small IFA i always tried to put maximum of my self through my posts-very few of IFAs are regular commentors like me-and i have written my above comment based on a telephonic talk with one of commentator in your web page who informed me about removal of our discussion page-(while older pages are still there)-i cannot name that person because he is regular visitor to your web magazine.
I am really really tired now to keep on writing same things for so long-without any result-
i feel sorry if you took my comment negatively-i have commented it as a eye opener what readers are feeling about such removal(as felt by the fellow who informed me by phone about removal from home page)-but this has been taken with negative aspect from your end-
and if you really wish i should not write just because i criticised you-i am not going to write any more-after all i am not only person who is suffering-
let others should take initiative to take pains to write-
i would not put my comments till you do not take back your words.


7 years ago

SEBI chairman must be bought to court and must be sentenced.SEBI can only do is to kill the genune and hard working IFA's of Mutual fund and can do nothing.....I cannot understand what out FM is doing.He is seeing all this and still he is not making a move..All are corroupt and the sufferers are the Insurance agents and IFA's....SEBI only sees the 2.25% of Mutual fund that a IFA gets but does not sees the corrouption in the whole market....


7 years ago

SEBI officials are to be closely watched and thoroughly investigated if necessary. All the long time investors are of the opinion that SEBI is hand in gloves with all the scams taken place so far. They are a bunch of inefficient people. Recently I read that SEBI staff are rewarding themselves with a more than double hike in their salary and perks. SEBI should prominently publish in major financial dailies, as to what is their present salary, what is the proposed hike and justification for their greed. They should covince and seek approval from Investor community, brokers, distributors, AMCs, Insurance companies as no one is having good opinion about SEBI officials and their activities.

Tata Steel forges ahead, but European operations may come under a cloud

Going ahead, slow demand in the EU on account of the ongoing debt concerns and the proposed mop-up of Rs7,000 crore through securities have sounded a note of caution

Tata Steel on Friday reported a net profit of Rs1,978.81 crore in the second quarter of the current fiscal, as compared to a loss of Rs2,707.25 crore during the same period last year. Consolidated net sales of the global steel major was Rs28,090.91 crore in the reporting quarter, a growth of over 11% over Rs25,276.14 crore for the year-ago quarter.  Other income rose to Rs814 crore compared to Rs18 crore in the September quarter of FY10.

During the quarter under review, the world's seventh-largest steel producer approved participation in the Direct Shipping Ore (DSO) project of New Millennium Capital Corporation. A joint venture company (JVC) named Tata Steel Minerals Canada Ltd was incorporated in October 2010. The JVC will acquire all the mining claims and assets relating to the DSO project, carry out detailed engineering and facility construction, and will be responsible for the project's operations. Tata Steel will own 80% of the JVC and NML the remaining 20%.

In September, Tata Steel, through its wholly-owned subsidiary Tata Steel Global Minerals Holdings Pte Limited, signed a joint expression of interest with the government of Laos for the identification and evaluation of iron ore and coal mines in Laos.

It also increased its stake in Riversdale Mining Limited, the listed entity in Australia, from 21.1% to 24.4% by way of open market purchases. The stake hike was again routed through Tata Steel Global Minerals Holdings Pte Limited.

Tata Steel's managing director HM Nerurkar said that the Indian steel market expects to see robust demand from construction, infrastructure and auto sectors in the coming quarters. To meet the higher demand, the company is expanding its steel capacity by three million tonnes in Jamshedpur.

With regard to its European operations, Tata Steel Europe's MD Karl-Ulrich Kohler said the demand outlook in Europe is uncertain and it would continue to focus on controlling costs.

Meanwhile, JP Morgan in a report on Sunday raised its target price on India's Tata Steel to Rs665 from Rs605, claiming that the steelmaker's fiscal year 2013 story was intact. However, it added that slow demand in European on account of the ongoing debt concerns in the region and the proposed issue of securities worth up to Rs7,000 crore remained a matter of worry.

However, Elara Capital, another brokerage firm while recommending a BUY on Tata Steel reduced the target price to Rs645 on account of pressure on the company's European operations. The brokerage is yet to take a call on the Tata Steel's proposed funds mop-up as the development is still in the initial stages.

(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security).


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