New names crop up in stock market manipulation, pointing to rampant rigging
Moneylife Digital Team 10 December 2010
A new bunch of equity market manipulators has been rigging and twisting stock prices at will, according to reports by the Intelligence Bureau
The 2002 securities scam masterminded by Ketan Parekh brought to light widespread manipulation in share prices. It left indelible footprints across the market landscape, and it appears that a fresh wave of 'market makers' has emerged from that episode, who are fashioning new ways and means to contort share prices, sometimes at the behest of company promoters themselves.
The government's own intelligence wing is maintaining remarkable vigilance on their activities; yet many of them have escaped the 'long' arm of the law. As Moneylife has reported earlier, the Intelligence Bureau (IB) appears to have kept tabs on the market activities of several individuals and has been preparing regular reports on this.
It is already known that barred stock broker Ketan Parekh and several of his associates remain active in the marketplace through various front entities. But less known are several other names that have cropped up in the meantime, who have been found to have colluded with various company promoters to influence the prices of their shares.
According to an IB report, Vinod Rathod, a Mumbai-based market manipulator, had fashioned a plan to acquire floating shares of Ruchi Soya Industries from the open market through "manipulative means", a few months ago. In conjunction with the promoters of the company, Mr Rathod "would engineer a fall in the share price, pick up a sizable chunk in the names of various front entities, take the price back up to Rs500 levels and then dispose off 26% stake to a strategic investor." The share price of Ruchi Soya was at about Rs110 in the first week of July 2010.
Mr Rathod together with one Syed Zafar was also allegedly planning to manipulate the Hindalco Industries scrip, the IB report says. The proposed plan included fund flows from the promoter to 'operate' the scrip. In lieu of 'services' rendered, Mr Rathod was planning to gift a Mercedes car to Mr Zafar, by initially transferring it to one Gagan Gupta in Delhi and later showing a sale to Zafar in Mumbai.
Further, at the behest of the promoters of Karuturi Global, he was planning to stock up shares, orchestrating a hike in prices from around Rs13 to Rs35 and then place the shares with other market operators, including the well-known South Indian industrialist Shiv Shankaran. It has also been found that Mr Rathod was also planning to operate the counter of IRB Infrastructure Developers with insider information.
Meanwhile, the IB has alleged that Mr Rathod was also active on the counter of Hanung Toys and Textiles and that he had "advised the promoter to advance the scheduled announcement of dividend from the third-fourth week of July to an earlier date, so as to facilitate placement with institutional investors." Part of the plan also included hiking up the share price to around Rs270-Rs275. The share price of Hanung Toys was in the price band of Rs250-Rs260 in the first week of July 2010. Mr Rathod has also been named as being active in JVL Agro Industries.
Manish Marwah is another name that features prominently in the IB reports. In August, Mr Marwah allegedly orchestrated arrangements with two Chandigarh-based companies, Ind Swift Laboratories and Surya Pharmaceuticals. Subsequently, Mr Marwah picked-up stakes in these companies through front entities of his associates, including Praveen Gupta and Ashok Kumar, both based in Delhi.
Mr Marwah also struck a deal with the promoters of Symphony and subsequently, Ashok Kumar was directed to start accumulating shares without hiking up the share price, the IB report says. Mr Marwah continued to be active on the counter of Marksans Pharmaceuticals, possibly using an entity called Leapfrog.
Another name identified by the IB for alleged shenanigans in the stock market is Raju Bartar. In August, Mr Bartar is said to have identified two foreign institutional investors (FIIs) for a qualified institutional placement (QIP) in Adserve, with the understanding that the promoter would return the amount to Mr Bartar and that the proceeds from the sale of shares would be shared on a 50-50 basis. Subsequently, around 20 lakh applications for the QIP were made through an FII by the name of Sparrow.
Mr Bartar also explored possibilities to influence the recent initial public offer of Gravita India. The IB also mentions that one of the promoters of Kiri Dyes had tasked Mr Bartar to hike up the share price from around Rs565 to above Rs600.
These are just some of the names that seem to be playing with share prices at will. While some of them, like Mr Marwah, have been booked by the market regulator, the Securities and Exchange Board of India (SEBI), many others still roam freely in the stock market jungle.
1 decade ago
sometimes , such acts present great opportunities to make money in stock markets. For instance say i know of a few companies whose share price can be easily manipluated because of poor float. i know that the companies are intrinsically much more valuable and hence hold on . i also know that some big guys are keen on entering the stock.
what i also notice is block deals , stock falling on pathetic delivery volumes . and if i match it with shareholding pattern , i observe that the big shareholders have all mantained status quo. if i juxtapose all data , i then know that the stock price on the screen is being manipulated so every time the stock corrects , it presents an opportunity for me to maybe add. there are many give aways if one has been in the market long enough. if there is clarity on the business model, i think the other things can generally be comprehended.
an investor should assume that in the market he is all by himself. the company laws favour the promoter and the promoter is always hungry for funds. even the biggest blue chips can resort to poor governance in bad times.
it will become tougher and tougher to successfully manipulate stock prices as too many people have already burnt their fingers and learnt it the hard way and hence the decreasing particiaption of retail . 80% of ipos today are scams, of the promoter by the promoter. people like anil ambani and mallya are the most likely scamsters as they are in deep trouble and desperately looking for equity. the warrant misuse by groups like AV birla during 2008 shows that they are all the same. difference is of degrees. if murder was legalised in this counrty , then they dont mind doing it. warrant issues i think was mis used largely. but legally such actions cant be challenged. after all they are all in a race for the indian of the year award , taking india to the world and forbes list!
1 decade ago
Main stream media is hiding these facts. I suspect the insiders are selling first, and when there selling is absorbed by the market, then the main stream media will highlight the viciousness and create panic in the market. It is for better for individual investors to sell and move out on cash.
1 decade ago
These market manipulators are helping retail investors to make money. Only problem is that retail investors not smart enough to make use of that :)
1 decade ago
These speculators are nothing but
rakshas of kalyug
1 decade ago
So it is quite obvious that all the stocks in market are manipulated from erstwhile infosys to karutri global.
Replied to ram comment 1 decade ago
It looks like you are trying to advocate for what is all going on as like all Saints and Sadhus working day and nite for welfare of poor retail investor-so that these poor guys can become rich out of stock market(Satta market or whole sale global casino market which is legalised by most of govts around the world-thats why so many scams surfacing every month-people like you defend this because may be you are one part of these manipulators) and you don"t criticise these outcomes which are known to most people who have suffered huge losses due to manipulators.
1 decade ago
When there is rampant speculation and rigging of stock prices SEBI had been found wanting. They want financial independence and does not want their surplus to be added to the consolidated fund of India, which is where it truely belongs. Actually SEBI should not have any surplus!! why they want to control their finances when they are unable to control the rigging of the market. May be they too want to play the market. With all the insider info they can certainly play it well. They do catch a few manipulators to make a show that they are doing their job. But the real Big Sharks are free to do what they please.
Narendra Doshi
1 decade ago
Would appreciate your response to Mr. Manoj's email.
1 decade ago
This means this stock mkt jungle is full of hundreds of ketan parekhs,every such operator is in a great hurry to make crores,and all the stock market fertinity is available for such types of manipulaters by making mockery of the system.
1 decade ago
In this story, Symphony Ltd has been named as one of the stock where Marwah was active. It was Moneylife (Debashis Basu & Sanket Dhanorkar) that had recommended buying Symphony Ltd in its 30 Sep 10 cover story. See the link below.

Will Moneylife clarify whether that recommendation still holds after this disclosure?
Replied to Manoj comment 1 decade ago
Similarly Surya Pharma was also recommended. What now?
Debashis Basu
Replied to SANarayan comment 1 decade ago
1. The IB report mentions a host of names of stocks and speculators. Only in some stocks was there a nexus between speculators and the company management. For instance, KP was active in many stocks including BPCL and HPCL. Surely, there was no nexus between the company and KP. In short, just because a speculator was active in a stock does not necessarily make the company untouchable.
2. Having said all that we can always go wrong not only about the future performance of a stock but also about the quality of management.
3. This is precisely why we have a well-defined and a mechanical stop loss and stop profit strategy that is published in every issue.
4. The stop on Surya got triggered sometime ago, the Symphony stock is still strong
Deepak K Rao
1 decade ago
Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood.
"Anthony C. Sutton"
The idea that any single individual without extra information or extra market power can beat the market is extraordinarily unlikely. Yet the market is full of people who think they can do it.
"Daniel Kahneman

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