Last year, SEBI stopped the SMS menace of SMS Techsoft when it found the company promoters and directors using this to offload their shares. This week, there is a surge in volume in Patidar Buildcon shares after ‘intra-day tip’ SMSes. Is SEBI aware about this?

As the stock markets are touching new highs, the spurious elements have become active. Several savers, investors are receiving daily three-four SMS on their mobiles asking to 'grab' an opportunity to make a 'killing' in shares of Patidar Buildcon Ltd, in just few minutes. These SMS ‘recommend’ people to buy one to 10 lakh shares of Patidar Buildcon (BSE code 524031) for current market price (CMP) of Rs207/208, which it claims would go to Rs225-230 in just few minutes!

Here are the SMS that are being circulated...

Following the messages, over the past few days, there is a surge in volumes in Patidar Buildcon shares on the BSE. Especially, on 25th March, its volume witnessed a jump of over seven times to 3.87 lakh shares as against two-week average daily volume of 50,000 shares. In fact, on Tuesday, Patidar Buildcon was locked at 10% lower circuit at Rs234.55 per share. Even on Friday, it remained locked in lower circuit at Rs181.45 after falling down by 5% on the BSE.

Image Source: BSE

Interestingly, one particular entity Rohit Saboo is found buying Patidar Buildcon shares and again dumping it in bulk on the same day. As of February Saboo held 94,405 shares of 1.72% stake in the company. On 25^th March, he bought 74,515 shares at Rs254.24 each and same day sold 1,07,096 shares at Rs256.40. He repeated the act on next two days as can be seen from below table that show all bulk deals in Patidar Buildcon throughout March 2014.

Image Source: BSE

Others like Suresh Kumar Maheshwari (HUF), Sumeet Chandak, Suman Modani and Prefer Abasan Pvt Ltd, however seems to have tried to book profit by selling Patidar Buildcon shares in bulk deals.

Last year in November, Market regulator Securities and Exchange Board of India (SEBI) barred 37 entities after it found various SMSs circulating in the market mentioning buy recommendation for SMS Techsoft were used by its promoters and directors to offload the company shares. SEBI had, suo moto, carried out an examination in the scrip of SMS Techsoft in view of various SMSs circulating in the market during February-March 2013 mentioning therein buy recommendation for the scrip of SMS Techsoft.

During the examination, SEBI said it found SMS Techsoft issued 3 crore shares to 31 entities, including three promoters, who are related to Rajesh Mangilal Ranka, that too when Ranka in 2010 was barred by the market regulator for two years.

Earlier in August 2013, SEBI had passed an order in a separate case where action was taken against persons luring investors through SMSes with promise of daily returns of up to Rs75,000 through mobile messages. SEBI debarred Imtiyaz Hanif Khanda and Vali Mamad Habib Ghaniwala from providing unauthorised investment advisory and portfolio management services (PMS) via SMS.

While in the earlier case the investors were being lured for unauthorised investment products, the SMS Techsoft case pertained to promoters of a listed company being involved as well with the spread of SMSes.

Coming back the case of promoting shares of Patidar Buildcon, the market regulator has yet to initiate any action. Our mail sent to SEBI remained unanswered till writing this story. We would incorporate response from the market regulator as and when we receive it.