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Stock manipulation: Stampede Capital

Stampede Capital shot up by 1045% from its low in January 2014. With just about 2,700 shareholders on its books, the stock has averaged 500 trades a day

 

Stampede Capital claims to provide a direct market access platform and algorithmic trading platforms to its clients through co-location facilities at domestic and global stock exchanges. It’s a subsidiary of Stampede Financials, Singapore, a trading member of Singapore Exchange, Dubai Gold and Commodities Exchange, Chicago Mercantile Exchange, the NSE and the BSE. It generated a trading turnover of about Rs60,000 crore in the June 2015 quarter. Its annual report states that it has a co-location facility at the NSE; in July 2014, the NSE approved Stampede TBT (Tick by Tick) Algo, an algo-trading platform. The bulk of revenues is generated by its three wholly-owned foreign subsidiaries. In FY14-15, it generated consolidated revenue from trading of Rs74.17 crore, (Rs23.98 crore). It reported a consolidated net profit of Rs14.53 crore in FY14-15 compared to a loss of Rs0.15 crore in the previous year. But what’s strange in this automated trading company is its stock price movement. In just four months, it shot up 385%, from a low of Rs165 on 27 March 2015, to a peak of Rs800 on 6 August 2015. This rally was shortlived. By 25th August, the stock had crashed 63% to Rs297. On 6 October 2015, the stock closed at Rs397, still up by 1045% from its low of Rs34.70 on 28 January 2014. With just about 2,700 shareholders on its books, over the past 12 months, its stock has averaged a daily trading turnover of Rs2.67 crore with an average of 500 trades a day. Will the regulator investigate this case—such few shareholders and such huge volatility?  

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COMMENTS

R Balakrishnan

1 year ago

co has a celebrity shareholder. Great capital gains for that shareholder. BigBargain for the BigB

One Sided-Credit Reports
Harsh rules, poor awareness can destroy the financial future of a person
 
It is 15 years since India answered the demand of large lenders, such as banks and finance companies, by setting up the first credit information bureau to track the credit history of individual borrowers. This has placed enormous power in the hands of lenders. Today, by merely reporting a defaulter to the four credit information companies (CICs) permitted to operate in India, a lender can destroy the financial future of a person and banish him/her from the formal credit market. Yes, this is, indeed, as harsh as it sounds. 
 
Since individual borrowers have no voice, the rules are one-sided and unfair to them; correcting them is not a priority for the Reserve Bank of India (RBI). For the past year, Moneylife Foundation (a not-for-profit entity) has run a free helpline to help those who have had payment problems but want to get their financial life back on track. The biggest finding of this helpline is the shocking lack of awareness about credit bureaus, credit history and its implications, even among a large section of educated Indians. The reason is simple. There has been no attempt whatsoever to run public service advertisements to educate ordinary people who do not read business papers. Meanwhile, one-sided rules with harsh implications have been framed to empower lenders. Most people realise they have been listed as defaulters only when they are refused a credit card or a loan; others continue to remain perplexed at the rejection. Some have woken up with fright on receiving legal notices and threats of arrest from asset recovery agents, who have bought bad loans going back 10 years and added a fat, compound interest component to the original payment. 
 
Another reason for the low awareness is the absence of any significant advantage to having a spotless credit record. Unlike most developed nations, a high credit score does not allow you to negotiate better credit terms, whereas a default shuts you out of the formal credit market, instead of allowing you to borrow at a higher interest. 
 
In a country where banks are bailed out for their poor lending practices and where Rs280,000 crore worth of corporate loans are in process of corporate debt restructuring (as on 31 March 2015), the financial system is completely unforgiving for those who may have defaulted or disputed even a few thousand rupees. Even when a disputed payment is mutually is ‘settled’ with a lender, it is reflected in a person’s credit record and leads to denial of fresh credit, or even a credit card. While our rules say that Indians can ‘rebuild’ their credit score, most people don’t even get that  second chance of a loan at a higher rate, because most lenders do not have systems in place to provide it. Similarly, our rules say that your bad credit record will remain on record for seven years. In reality, our credit bureaus do not wipe out negative data at all. In the United States, the Fair Credit Reporting Act clearly restricts how long negative items can remain on credit records. It is seven years for most data and 10 for bankruptcy declarations. Many developed nations wipe records after six years. It is called the ‘Right to be Forgotten’.
 
Moneylife Foundation has innumerable examples of people who defaulted in 2004-05 and are still being chased by recovery agents with hugely inflated claims. Or they are being denied a new loan, 10 years after a previous default. In fact, lenders’ excesses and indiscriminate lending in 2006-08 had led the maximum number of people being reported as defaulters. It is time the victims got fairer rules. If your loan or credit card application has been repeatedly rejected, wake up now. Check your credit report and email us with details. It is time to speak up and ensure that lenders cannot remain unforgiving of small individual defaults while large corporate defaulters are routinely bailed out by the exchequer which recapitalises banks every few years.
 
Moneylife Foundation is conducting a short survey on credit scores. Click here to take this survey

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