SEBI probe found that a group of entities connected to each other and to T Spiritual World had dealt in the stock in a fraudulent and manipulative manner
New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs1.75 lakh on Galaxy Broking Ltd on charges of aiding and abetting its clients in fraudulent dealings in shares of T Spiritual World Ltd (TSWL), by seeking to create artificial volumes and influencing the stock price, reports PTI.
SEBI passed the order, dated 4th September, after a probe into the share dealings of TSWL for a period from 12 July 2004 to February 2005 -- during which its share price fell from Rs27.85 to Rs5.06.
A total of 2,07,94,921 shares got traded in 130 trading days with an average daily volume of 1,59,961 shares in this period.
The probe found that a group of entities connected to each other and to TSWL had dealt in the stock in a fraudulent and manipulative manner during the investigation period, by creating artificial volume, false and misleading appearance of trading and price manipulation.
It was further found that Galaxy Broking Ltd aided and abetted three of the entities in executing trades in the scrip as a broker and had allegedly failed to maintain complete and proper Know Your Client (KYC) forms of its clients.
SEBI further found that the broking firm had placed large orders in the scrip for a quantity during the investigation period. Out of the total 48 such large buy orders and 21 large sell orders placed in the scrip, Galaxy Broking accounted for 40 buy orders and 7 sell orders, respectively.
The said buy orders were placed at rates which were marginally lower than the prevailing market price.
Further, most of such large buy orders were deleted by the broker at a later stage and only two% of the total large orders placed by it got executed.
The broker deleted most of the large buy orders from the system after keeping them exposed for some time and the orders were generally placed at prices lower than prevailing market price, making it clear that the same was done to avoid buy orders getting executed, SEBI said.
The regulator said the entity had also influenced the price by placing buy orders at higher price in the scrip for its client, Vintel securities Pvt Ltd, while it also did not maintain proper KYC forms of its clients.
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