The market regulator SEBI recently banned Sanjay Dangi for colluding with promoters of four companies to influence share prices; however, Intelligence Bureau reports suggest that his involvement stretches way beyond these four firms

Last week, the market watchdog, Securities and Exchange Board of India (SEBI) had issued an order against Sanjay Dangi, a Mumbai-based high net-worth individual, barring him from dealing in the equity markets. Initial investigations by the Income Tax Department and further findings of SEBI confirmed that Mr Dangi had colluded with promoters of four companies, namely, Murli Industries, Ackruti City, Welspun Corp and Brushman India, to artificially jack up these scrips through dummy companies connected to the promoters or Mr Dangi himself.

According to regular reports by the Intelligence Bureau (IB), which has been keeping tabs of Mr Dangi's market activity, he has been active in several other companies as well. These reports, available with Moneylife suggest that Mr Dangi, together with Viren Ahuja, a Mumbai-based business man "was planning to take the share price of Core Projects to around Rs350". After securing F&O trading rights from 25 June 2010, Mr Dangi, with a view to hiking up the share price had suggested that the promoters convert their holdings in cash into the F&O. The IB found that the share price of Core Projects had increased steadily from around Rs195 in the beginning of June 2010 to close to Rs250 by the end of the month. This raises questions about how stock exchanges select stocks for inclusion in the derivatives segment.

At the same time, the IB also found that "Dangi in conjunction with Anand Rathi, were working to hike up the share price of Ackruti City to Rs 700. In this connection,Dangi was willing to buy shares worth Rs 25 crore. Dangi and Rathi were also planning to operate the Gokul Refoils & Solvent counter by cornering around 40 lakh shares in the open market and hike the share price to around Rs120-125 and eventually into the F&O segment." It further revealed that Mr Dangi, along with one Akash Bhansali of Enam Securities and the promoter of Welspun Gujarat Stahl Rohren was proposing to purchase 5-10 million shares, so as to push up the share price.

During August, it was found that Mr Dangi continued to collude with BK Goenka, promoter of Welspun Corporation, with the objective of manipulating the share price towards Rs400 by November 2010. Mr Bhansali and the Janus Capital group were also roped in to buy in a sustained manner. Janus was to buy 2.5 million shares at around Rs260. The cartel expected that a sustained rise in prices would attract buying from LIC which would then take the scrip to much higher levels.

But this was merely the tip of the iceberg. Mr Dangi was also active in the Prakash Steelage stock, selling 1.3 million shares at Rs225 through Edelweiss Capital. Of the total sale, the report says, 0.8 million shares were from the account of one Pawan Bansal. Earlier, Mr Dangi and his associates had accumulated large quantities of the scrip through various entities, including Pacific Corporate Services. After booking profits, Mr Dangi was involved in heavy selling of this counter.

Further, Mr Dangi, in collusion with the promoters, was also involved in the counter of Amar Remedies and was responsible for raising the price of the share to Rs102 as on 23 August 2010. Subsequently, Mr Dangi was scheduled to go to the UK to organise an FCCB issue at a stock price of Rs150. In another counter, Sahyadri Industries, Mr Dangi had bought a 20% stake out of which 14% was in his own company's name (Pacific Corporate Service), while 6% was in the name of his associates. In consultation with the promoters, Dangi directed his associates to buy the scrip taking the price up to Rs195 and beyond. Meanwhile, Mr Dangi continued to be active on the stocks of Core Projects and Technologies, Orchid Chemicals and Pharmaceuticals and Panasonic Home Appliances India Company.

In September, says the IB report, Mr Dangi was accumulating to hike the price of shares of Welspun Corporation with the objective of placing it with institutional investors. In co-ordination with the promoters, Mr Dangi purchased 9 lakh shares from India Fund at Rs263.80 per share in the books of its front entity, Pacific Corporate Services. The bulk buying was an effort to prevent the fall in the price of the scrip. Further, in respect of Gokul Refoils & Solvent, Mr Dangi was instrumental in raising the share price to Rs130, then allowing it to cool down to Rs 100. This was as per the laid-out plan for manipulation, which involved the placement of 40 lakh shares with domestic institutional investors at Rs100.

Meanwhile, Mr Dangi, at the behest of the promoter, attempted to pick up all floating stock from the market in respect of J Kumar Infraprojects (JKIL) and then placed the scrip with institutions. About 75,000 shares were also transferred from the promoters' account to Mr Dangi's account, with the further prospect of three lakh shares being exchanged on 23 and 24 September 2010. Mr Dangi was also in contact with Anand Rathi in this context. Bulk deals in JKIL on 22 September featured Pacific Corporate Services and Cello Finance Corporation, linked to Pradeep Rathod. Mr Dangi was also active on the counter of Parekh Aluminex in which the promoter wanted the share price to rise to Rs1,000. Mr Dangi held around 10% of Aluminex.

It was also found that Mr Dangi, along with Anand Rathi and Pradeep Rathod, in conjunction with the promoters, proposed to operate the Ackruti City scrip. The game-plan included raising the price of the scrip to around Rs700 for placement with fund managers.

While the IB reports blandly reproduce such explosive and eye-popping information, complete with the names of top institutions, it is not clear if any of these details are being investigated by SEBI.