Parklight Securites and Parklight Investments have been pulled up many times in the past for price manipulation, yet in a recent order, the Securities and Exchange Board of India, lets off the directors with just a warning and suspends Parklight Investments for just a week
Parklight Securites and Parklight Investments get away once again for price manipulation. A few months back, in the order passed by the Securities and Exchange Board of India (SEBI) on 9 November 2012, both the entities were barred for a period of two weeks for the indulging in circular trading of the scrip of IT Microsystems (India) in the month of July 2002. Similar activity was now found out in the scrip of Genus Commutrade for the period May 2001 to July 2001. This time the regulator let off the directors with just a warning and barred Parklight Investments for just a week in an order dated 31 December 2012. These are just some recent actions taken against the two firms. The tiny Ahmedabad-based Parklight Securities has nearly 15 regulatory actions against it in the past. The director of Parklight Investments, Uday Vora, has been charged on numerous occasions for indulging in price manipulation and creating benami applications for certain IPOs, but yet the regulator feels a warning would suffice.
Moneylife has highlighted how these two companies have been let off several times in the past. Parklight Investments, which made benami applications for grabbing a bigger allotment in the IPO of Nissan Copper and for ramping up its share price, paid the maximum ever penalty-of just over Rs14 crore. Parklight Securities was allowed to escape with a Rs25,000 payment and a three-month suspension of registration through two consent applications, despite its involvement in 15 of the worst cases of price manipulation. On 15 May 2008, SEBI let off Harikishan Hiralal and Parklight Investments for artificially hammering down the price of Fourth Generation Information Systems. On the same day, it let off P Suryakant Share & Stock Brokers for ramping up the price of Genus Commutrade.
This is not only in the case of the Parklight companies; in the past as well SEBI has let off habitual offenders in stock markets with petty fines through its “consent orders.” Firms like SMC Global have been allowed to file consent terms seven times and Shriram group six times, which damage the very purpose of the consent process as a deterrent. SEBI has also been quietly letting off a few hundred chosen price manipulators and offenders with a simple ‘administrative warning’. These orders suggest that SEBI’s investigation, adjudication and enforcement action depends on the whims of investigation officials. SEBI does not feel that it owes the public an explanation for who is punished and who is let off.
In fact, Moneylife has pointed this out many times in the past. (Read: Are SEBI’s consent orders a sham?, SEBI’s indulgent ‘warning’) Yet, nothing as changed and repeated offenders are let off with just a warning. Our question still remains, why do repeated offenders get away with consent applications and minor punishments instead of being permanently barred?
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Even if this practice has been taken up with the view to speed up the investigation and adjudication process, this is doing more harm than good as it has failed to deter the intermediaries and person associated with companies to stay away from manipulating the market. Rather they are finding it a bit convenient to pay some paltry fine against their misdeeds.
I request to Moneylife or other organizations to take up this matter because no single investor can raise this issue on his/her own. The way this mechanism has been used so far, questions the intentions of the regulator and its officials.