SEBI alleged that Suzlon had amended its code of internal procedures and conduct for prevention of insider trading on 4 February 2011, after a delay of more than two years
Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has disposed off proceedings against wind turbine maker Suzlon Energy, its chairman Tulsi Tanti and four other executives after they together paid Rs12 lakh to settle charges related to alleged delay in amending insider trading norms, reports PTI.
Besides Tulsi R Tanti—founder chairman of Suzlon Energy—others who have entered into a consent order with SEBI are Girish R Tanti, V Raghuraman, Ashish Dhawan and Hemal A Kanuga.
Girish Tanti and Raghuraman are currently on the board of Suzlon.
According to SEBI, Ashish Dhawan was a director with the company while Kanuga was a compliance officer.
All the six entities, including Suzlon, paid Rs2 lakh each to settle the charges with SEBI.
In six similarly-worded orders issued yesterday, SEBI said that it is disposing off “the aforesaid adjudication proceedings,” against the six entities.
As per norms regarding insider trading, all listed firms were required to frame a code of internal procedures, among others. This regulation was notified by SEBI in 2008.
However, the regulator alleged that Suzlon had amended its code of internal procedures and conduct for prevention of insider trading on 4 February 2011, after a delay of more than two years.
In this regard, adjudication proceedings were initiated against the six entities.
While the proceedings were in progress, the company and its officials proposed a settlement under SEBI’s consent order mechanism, in August last year.
In October 2012, the entities revised their consent terms and offered to pay Rs2 lakh each to settle the case.
Thereafter, SEBI’s High Powered Advisory Committee on Consent (HPAC) after deliberations, recommended the case for settlement on the payment of the amount.
This was also approved by a panel of SEBI’s whole-time members, following which the company and its officials remitted the amount earlier this month.
SEBI noted that enforcement actions, including commencing or reopening of the proceedings, could be initiated if any representation made by the entities is found to be untrue.
While barring Angel Broking, one of the biggest brokerages in the country, SEBI said the occurrence of synchronized deals in a circular manner persistently cannot be said to be a co-incidence as the shares were being rotated intra-day within a closed group and there was no change in the beneficial ownership in the shares of Sun Infoway
Market regulator Securities and Exchange Board of India (SEBI) has barred Angel Broking from accepting new assignments or any new clients for two weeks for violating code of conduct for stock brokers.
“The noticee (Angel Broking), by indulging in the trading pattern discussed above has failed to perform its duties as specified in the code of conduct for stock brokers in the Broker Regulations. In view of the above, I find that the noticee has violated Clauses A(2) and A(3) of the Code of Conduct prescribed for Stock Brokers in Schedule II under Regulation 7 of Broker Regulations,” said Prashant Saran, whole-time member of SEBI in an order.
The market regulator has also prohibited Allwin Securities and Bharti Thakkar India Securities from taking up any new assignment for two weeks. It also suspended erstwhile N C Jain (presently known as NCJ Shares and Stockbrokers Ltd) for a period of one week.
The order would come into force after 21 days.
The matter relates with trading of Sun Infoway (SIL) between 5 February and 2 May 2001. SEBI’s investigations prima facie revealed that circular/reversal traders were executed by certain brokers forming part of few groups in the scrip of SIL. Such circular/reversal trades created artificial volume to the tune of 5.43 lakh shares (gross) in 37 days out of 50 trading days. It was found that the circular trading in the scrip had generated 26% to 97% of the daily volumes on the days when such trading was observed. The circular/reversal trades had resulted into an increase in the price of the scrip in the beginning of the investigation period till 2 March 2001 and the price of the scrip had stayed in the range of Rs342 to Rs296 (opening price). Thereafter, the trading of these entities in the scrip reduced drastically, the volume of trades in the scrip became negligible and the price of the scrip also started declining. The “last traded price” (LTP) analysis for the entire period shows that the price of the scrip varied in the range from -14% to 11.54%, SEBI said.
SEBI said, during the investigation period, three different groups were found trading in the scrip of SIL in a circular manner. Out of these, the group consisting of eight brokers/sub-brokers, NC Jain, Opulant Stock Broking, Bharti Thakkar India Securities Pvt Ltd, ISJ Securities/Vintel Securities, Sripal Jain, Joindre Capital Service/Alwin Securities and Reneissance Securities/Mellennium Securities and their clients including Angel Broking were found trading amongst themselves in circular manner, which led to the creation of artificial volumes in the market. The total volume generated by this group by way of circular trades was 3.42 lakh shares (gross) or about 37.52% of the total quantity traded during the period of investigation.
In his order, Mr Saran said, “Considering the number of shares involved in the present proceedings executed by the noticee for its client and also the pattern of trading, I am of the view that these numbers were good enough for the noticee to raise some suspicion on the trading pattern of its clients. Therefore, it can be concluded that the noticee had aided and abetted its client in the creation of artificial volume in the scrip of SIL in violation of the provisions of Regulation 4(b) and (d) of the PFUTP Regulations.”
“I further note that if stock brokers are not careful and allow their systems to be misused, manipulations cannot be eliminated from the market. The circular/reversal trades are contrary to normal trading practices and create false market. The noticee (Angel Broking) has dealt in the scrip of SIL in a manner detrimental to the interest of investors. Such acts threaten the market integrity and orderly development of the market and call for regulatory intervention to protect the interest of investors as the same pose serious threat to the price discovery mechanism of the stock exchange and the safety of the securities market mechanism,” Mr Saran said.
Dena Bank announced its third quarter results which were positive overall, especially on the operations front. But some concerns remain
Dena Bank has posted a net profit of Rs206.44 crore for the quarter ended 31 December 2012, a 10.75% increase, when compared to Rs186.68 crore for the corresponding period last fiscal. At the same time, its total revenues have increased 33%, from Rs1,810.21 crore for the quarter ended 31 December 2011 to Rs2,408.42 crore for the quarter ended 31 December 2012. The profitability was helped by an increase in interest income, which rose 35% to Rs2,264 crore for the reporting quarter. The bank expects to maintain net interest margin of around 3% for the remainder of the 2013 fiscal.
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According to Moneylife’s database, the bank’s quarterly revenue growth rate (33%) has kept up with its three-quarter year-on-year (y-o-y) growth rate of 35%. However, its operating profit growth disappointed, rising only 13% for the quarter compared to 29% y-o-y growth rate in the preceding three quarters. Its annualized return on capital employed (RoCE) stood at a respectable 15%. Likewise, its operating RoCE was double, at 30%, which shows operating efficiencies of the bank. Given all this, the bank is quoting at an attractive valuation, with its market capitalisation quoting at just over two times its operating profit.
As of 31 December 2012, 30% of its loan portfolio was doled out to large industries while just over 10% was exposed to the agricultural sector. In the retail credit segment (which took up just over 12% of the total loan portfolio), the housing segment was its biggest contributor, with over 60% given out to new home owners.
Despite positives, there were some negatives too, but they weren’t of that much concern.
Asset quality somewhat deteriorated, with its non-performing assets (NPAs) rose as much as 48% to Rs1,317 crore during the quarter ended December 2012 from Rs885 crore from the same period last year. The bank has set aside Rs237 crore as provisions, which is higher by 15% when compared to the last quarter. The bank will start monitoring of borrowing accounts online to prevent slippages. At present, Dena Bank is monitoring all accounts above Rs10 crore on a daily basis.
As of December 2012, its advances stood at Rs63,040 crore when compared Rs47,928 crore as of December 2011. Likewise, its deposits stood at Rs84,882 crore on December 2012 when compared to Rs68,339 crore as of December last year. The increase in savings deposits by 10% to Rs20,216 crore led to a decline in CASA ratio, which is a concern. The CASA ratio stood at 30.98%, down nearly four percentage points, from 34.90% during December 2011. A decline would mean higher cost of funds for the bank which in turn would shrink margins. The cost of deposits stood at 7.75% which is marginally higher than 7.09% seen in December 2011 quarter.
Dena Bank has opened 14 new branches during the quarter and total 89 branches during the nine months ending December 2012.