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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.
|Nikki Global Finance||1169%||www.moneylife.in/article/6258.html|
|*(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.
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).