SEBI says, don’t have info on surveillance system and prosecution!

The capital market regulator has spent crores of rupees, twice, over sophisticated real time market surveillance systems to track stock price manipulation. Yet, it says it has no statistics on the surveillance!

In a shocking disclosure, the Securities Exchange Board of India (SEBI) says that it does not have information relating to its market surveillance system! This was in response to an RTI filed by Moneylife. Moneylife had filed an RTI on 9 April 2013, requesting information on SEBI’s surveillance statistics and had asked SEBI how many suspicious cases its sophisticated Integrated Market Surveillance System (IMSS) and Data Warehousing Business Intelligence System (DWBIS) had detected till 31 March 2013. Our questions were simple:

  1. How many detected cases had resulted in prosecution
  2. How many detected cases had resulted in consent orders
  3. How many detected cases were dismissed due to lack of evidence
  4. How many detected cases are still pending for investigation

Well, it seems the regulator did not have such information with it! SEBI vide its reply no CPIO/AKS/AJ/325-2013/10853, stated, “It is informed that the information sought by you is not available with the concerned department of SEBI.” How is this even possible? If the surveillance department does not have such information, then who has it? Who is really in charge of monitoring the data captured by the surveillance department?


SEBI has spent over a whopping Rs50 crore in the so called “state-of-the-art” surveillance systems: IMSS and the more modern DWBIS. Earlier, SEBI had touted that the DWBIS project will “exploit the power of modern technology in terms of computation and speed of data analysis” and “host pattern recognition algorithms” to crack insider trading. Despite all this hype and talk and the enormous amount of money spent, stock manipulation still continues, right under SEBI’s nose.

Even now, Moneylife routinely comes across companies, mostly with poor fundamentals and past track record of transgressions, whose share prices brazenly manipulated, in no time, putting minority shareholders at a disadvantage. For instance, Moneylife wrote that Nucent Estates (Unquoted section of Moneylife issue dated 16 May 2013) went up a whopping 742% from just Rs1.28 to Rs10.78 in just one year. The company had earlier failed to comply with Bombay Stock Exchange (BSE) corporate governance norms. It even changed its name, a common tactic adopted by companies to disguise their past transgressions. Similarly, Kelvin Fincap (Moneylife issue dated 2 May 2013) rose 549% within a year after BSE had revoked its suspension! There are numerous cases which Moneylife has written about. Do check out the Unquoted section of the magazine and website ( You will be alarmed and surprised at the ease of how company share prices can be manipulated. Moneylife even did a cover story on this (which can be accessed here: Stock Manipulation). Even stock exchanges such as National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) do little. So much for SEBI spending huge amount of tax payers’ money on this surveillance system!

Moneylife had found out that 48 staff members are posted in the Integrated Surveillance Department (ISD) of SEBI, which houses the IMSS and DWBIS system, as of 31 March 2013. The IMSS contract value was found out to be Rs20.55 crore, out of which Rs6.52 crore went towards “capital expenditure” between 2007 and 2010. HCL Technologies was the vendor.

Then SEBI adopted another system known as DWBIS, which came into existence from 2010 onwards, and the contract value was found to be Rs34.38 crore and Tata Consultancy Service (TCS) is the new vendor. Out of this amount, over Rs11 crore has gone towards “capital expenditure” in the last two years alone. This is collectively over Rs50 crore of taxpayers’ money.

This is a lot of taxpayers’ money and nobody knows if SEBI is truly looking at cases triggered by the systems, if at all, let alone punishing offenders and compensating minority shareholders. Nobody knows how effective SEBI’s surveillance system is either. It is even more shocking that the surveillance department of SEBI do not have the information with them.

Moneylife has filed a first appeal before the First Appellate Authority at SEBI.

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    7 years ago

    You are saying about SBI is fine but what about the Stock Market, where the pendulum swings with money bags and all is legal.

    B Pugazhendhi

    7 years ago

    The statistics may not be really available. But we may ask them whether any report or compilation or analysis about suspecious transactions are available. They cannot give any ambiguous reply for such a query. By the way the way, did Money life file any appeal?


    7 years ago

    In yesterdays economic times supplement ,read article written by Devdutt Pattanaik, where in it has been mentioned that,"When shareholder only thinks targets & the regulator only thinks rules,the market suffers.People,pushed to a corner,end up bending & breaking the rules.Often the policeman & the judge in creating too many rules ends up encouraging criminals,because good people are too scared to work."

    Sushil Maheshwari

    7 years ago

    It proves SEBI themselves are doing scam. It means do we need another regulator to monitor SEBI, who are just whimsical and do not own any responsibility,


    Dayananda Kamath k

    In Reply to Sushil Maheshwari 7 years ago

    you are 100% right. in india regulators are the biggest manipulators whether it is rbi, sebi, irda. cvc or cbi. because they are appointed by reckless casual political bosses. and that will serve their purpose of looting the country.every head of regulators appointment is controversial and open secret that they are appointed to cover up their own misdeeds.


    7 years ago

    forget about the small shares, look at shares of reliance communication in past 50 days, look at closely the minute to minute pattern of trading . you will realize the insider trading and stock manipulation happening.

    V K JAIN

    7 years ago

    Good work done by Moneylife. To me, SEBI’s response is not surprising. It reflects, and, is in line with the way SEBI work’s (or don’t) and hides information.
    I would request Moneylife to introduce a RTI page; Readers can suggest RTI queries and some of them can file these to CPIO or appropriate authority seeking information under the RTI Act. The responses would startle most of you. It will expose the lip service of authorities to investor protection.

    For starters, I propose that the following information may be sought under RTI from SEBI:

    1. The present status and action taken by SEBI, Ministry of Corporate Affairs and CMC on the potential vanishing companies list submitted by Midas Touch Investors Association of:
    (a) 604 companies in 2003 (which was also submitted by BSE)
    (b) 150 companies or thereabouts submitted in 1999 alongwith investor grievances
    (c) List submitted by any other organistion or association.

    Virendra Jain
    Midas Touch Investors Association

    arun adalja

    7 years ago

    our regulatories are wasting public money for not doing job in a proper way.they must be sacked immediately without any delay.they have to regulate the market and take strict against the people who are doing mal practices.

    shailesh gandhi

    7 years ago

    Unfortunately this is representative of how ineffective many surveillance and vigilance systems are. They are put up as a routine, with no real intention or will to do the job. Moneylife has taken the lead; citizens must keep monitoring various activities and asking for accountability.

    uttamkumar dubey

    7 years ago

    I would like to name a very popular and fake company called Resurgere Minerals and mines.its controlled n managed by Subhash sharma.

    Many ppl have lost their wealth in it.But as usual the blind and corrupt system/rulers of the nation have sold out everyth from the nation and are busy maintaining their swiss account.

    uttamkumar dubey

    7 years ago

    I believe "WILL" is more important than any "surveillance system".

    And none of the public fund companies are doing justice to the people of the nation and neither to their job and nor to humanity.

    Its time Kejriwal should run the politics of the nation and Moneylife should look into financial aspect of the nation.

    Great job Moneylife,keep the nation in the loop... Pls oppose fake bharat nirman and boycott such ppl.

    Request moneylife to have special edition wherein we know the shameless face of the nation, we would try our best to make it reach to the masses.


    7 years ago

    I entered into an F&O contract (GMR Infra) thru the franchisee(Kakinada) of a broker of Hyderabad in 2008. But, soon I learnt that the scrip was banned by the NSE then. Immediately I tried to verify the Transaction (Ref.No. in contract note given by the broker in email) in NSE site, but to my utter dismay, it is not found.

    I complained to SEBI thru' email the entire eposide with all the referencce numbers.

    But, they simply sent reply to approach their Chennai Office with all the proofs, which I do not have other than the electronic related data, which I have already submitted to them.

    Bosco Menezes

    7 years ago

    And it appears that it is this inability of SEBI & the stock exchanges to curb manipulation with their expensive surveillance systems that has resulted in the biggest disaster visited upon Indian investors - PCAS (Periodic Call Auction System) - applied to more than half of all active stocks on the BSE.
    PCAS , instead of curbing manipulation, has curbed trading itself in PCAS scrips. Perfectly liquid scrips (though they might have not being doing 10K shares traded daily) have been now actually been made illiquid, leaving majority of investors stuck - their hard
    earned money of many years of effort is now just an electronic entry in a demat statement with no way to encash the same.
    What if an investor requires to encash his holdings for a medical emergency ? Or for a child's marriage ? Or to make a payment on the flat he has booked ? .
    Truly, ordinary people have been dealt a hammerblow by SEBI with the PCAs system.
    Just a few weeks ago the Supreme Court rejected the PIL to stay the IPL playoffs ....
    saying spot fixing by individuals cannot be a resaon to ban IPL. Cannot SEBI realise that that manipulation by few
    operators cannot be a reason to shut down the small cap market & harm crores of investors ?

    Ashok Visvanathan

    7 years ago

    They have the statistics, but are probably ashamed to reveal it. The best surveillance is revealing Seller buyer identities on the screen. In the days of floor trading all brokers knew which share was being manipulated, and would tell you. Now SEBI may know but will say they cant tell you as it is unethical to do so. This is progress !

    Jose Koshy

    7 years ago

    This is crazy, how can SEBI wash its hands off. Guess its with the finance ministry..This must be taken up with a PIL in Supreme Court and expose. Am sure if the answers for your questions are exposed, many heads in SEBI will roll as they would not have taken actions ! Great work MoneyLife..file a PIL. Don't let them go scott free.

    R Balakrishnan

    7 years ago

    Cleverly drafted reply. Perhaps some other department has it. Read the response:
    “It is informed that the information sought by you is not available with the concerned department of SEBI.”
    Maybe it is available with someone else at SEBI?
    Investors are perhaps better off without this agency, which is more like a coroner.

    ASCI to suspend ads pending investigation

    The initiative from ASCI will go a long way in getting seriously offending ads removed immediately before they cause any damage to the consumers and society in general

    Advertisements which breach the ASCI (Advertising Standards Council of India) code either by being grave obscene, indecent, vulgar or which are against public interest will now have to be withdrawn immediately pending decision of its Consumer Complaint Council (CCC). ASCI has recently amended its Articles of Association to provide for Suspension Pending Investigation. This is similar to the codes of some of the other SROs like the Advertising Standards Authority of the UK. The new Article on Suspension pending Investigation states as follows: 


    “In exceptional circumstances, when it appears prima facie that an advertisement is in serious breach of the Code and it’s continued transmission on/ through/ by any medium causes or has the effect of causing public harm and/or injury or its continuation is against public interest, then ASCI would, pending investigation and decision by CCC, forthwith require the advertiser/ the advertising agency/ the media buying agency and the media concerned to immediately suspend the release of advertisement.


    In the event of suspension of any advertisement in the manner, the CCC shall at the earliest and not later than 30 days from the date of the suspension, adjudicate whether or not the advertisement is in breach of the Code and pass appropriate order accordingly after giving a reasonable opportunity to hear to the advertiser whose advertisement has been suspended. This decision of the suspension is to be taken by the chairman (or, in his absence, the vice-chairman) of ASCI, in consultation with two members of the CCC.”


    Commenting on this initiative Arvind Sharma, ASCI chairman said, “Suspension Pending Investigation is an important landmark for ASCI. It will ensure immediate action against advertisements that are clearly seen as against public interest. This initiative will go a long way in getting seriously offending ads removed immediately before they cause any damage to the consumers and society in general. We expect the advertising sector consisting of advertisers, ad agencies and media to support this very important initiative wholeheartedly to protect the interests of Indian consumers and general public.”


     Advertising Standards Council of India (ASCI) is an industry body set up to voluntarily self-regulate advertising content. ASCI & its Consumer Complaints Council (CCC) deal with complaints received from consumers, industry and NAMS, against advertisements which are considered as false, misleading, indecent, illegal, leading to unsafe practices, or unfair to competition, and are consequently in contravention of the ASCI Code and Guidelines for Self-Regulation in Advertising. ASCI has recently taken other initiatives to speed up its decision making process.


    ASCI has also introduced the Fast Track Complaint Redressal process which will provide decisions related to the intra industry complaints within seven days.

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    FSDC must limit itself to coordination: RBI governor

    The governor also expressed reservations on the recommendations of the Financial Sector Legislative Reforms Commission, which calls for making the FSDC a statutory body to ensure financial stability

    Reserve Bank of India (RBI) governor D Subbarao today said the Financial Stability and Development Council (FSDC) should act only as a coordinator between financial regulators for ensuring financial sector stability.


    “There should be a coordination body such as the FSDC, but the coordination body should be just that—a coordination body which will have more importance during a crisis time—but in normal times, will be at a low level equilibrium,” the governor said.

    Subbarao also expressed reservations on the recommendations of the Financial Sector Legislative Reforms Commission, which calls for making the FSDC a statutory body to ensure financial stability and have a board headed by the finance minister to oversee the same.


    Under the present FSDC arrangement, the RBI governor is a chairman of a sub-committee as the overall head is the finance minister.


    “In the Reserve Bank, we have some reservations about that sort of an arrangement. In particular, the concern is that the responsibility for financial stability can be given to a committee rather than to an institution,” Subbarao told a banking summit organised by the Indian Merchants Chamber (IMC) in Mumbai.


    The FSLRC was headed by retired Supreme Court judge BN Srikrishna and submitted his report in March.


    The report called for a total overhaul of the existing financial system by merging the oversight functions of market, commodity, insurance and pension regulators.


    “By the year 2020-25, we hope to achieve $13-$14 trillion economy. An ambition cannot be achieved unless there are steps taken towards it. Therefore, you need something that is drastic, something that is total overhaul of the existing financial system,” Srikrishna had said in his report.

  • User 



    7 years ago

    To those who were following the relationship issues between Finance Ministry on the one side and all financial sector regulators on the other side, it was evident from the very beginning that setting up FSDC was the formalization of the continuing efforts by Finance Ministry to act as a super regulator over all regulatory bodies in the financial sector. Experts in the field had minced no words to point out that this will destabilize the equilibrium deftly built up by eminent persons who headed Finance Ministry and RBI in the formative years of financial regulation in India and consciously maintained by their successors till the recent past. Viewed in this context, the concern expressed by Dr Subbarao on June 5 at the 7th International Banking and Financial Conference 2013 should get the attention it deserves from all stakeholders.

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