Regulator will also examine the trading system of the two brokerages.
In an order issued today, the Securities and Exchange Board of India (Sebi) has barred 16 entities from accessing the markets for the time being. The charge against these entities is of creating artificial volumes by doing synchronised trades in a number of stocks.
The stock exchanges have been directed to square off any open positions of the barred entities and to ensure no fresh positions are created. Depositories have been directed to freeze the beneficial owner accounts of the banned entities. Sebi will also examine the trading systems of the two brokerages through which these entities executed the bulk of their activities.
The 16 entities are: Hemlata Ramesh Hankare, Rashmi R Ghandhi, Anil Rajmal Shah (HUF), Alpesh R Shah (HUF), Jitendra Mannalal Jain, Renu Madhusudhan Paliwal, Hasmukh Valchand Jain (HUF), Naresh V Rajawat (HUF), Pawanben Valchand Jain, Reeta Naresh Rajawat, Kunal Dileep Kothari, Sweta Bharat Kothari, Neela Khicha, Shobha Dilip Kothari, Hitesh Mahendra Jain and Kamlesh P Jain (HUF).
The stocks these entities allegedly manipulated include Allcargo Global Logistics, Asian Star Company, KSL& Industries, Mavens Biotech, Panoramic Universal, Rasi Electronic, Sat Industries, Ushdev International, Jaybharat Textiles and Real Estate, Lotus Eye Care Hospital, MVL Ltd, Anil Products and KBS Capital Management. The stock prices of most of these companies fell after the Sebi order.
In a 22-page interim order, to come into force immediately, Sebi said, “the buy and sell volumes of the Group were almost identical. This indicates that the Group had no intention to accumulate stock or sell its existing holdings... The Group had indulged in creation of artificial volume by trading among themselves... Most of the trades among the Group were synchronised”.
Adds the order: “The modus operandi has been to create artificial volumes that were substantial enough to make the said scrips attractive enough to investors.”
Its order also names many of the entitties as having the same addresses or telephone numbers.
An inquiry in the trading activities of the banned entities was first carried out for the period between March and June 2009. The period of examination was then extended up to September 30, 2009.
Sebi is to also examine the trading systems of two stock brokers, India Capital Markets and Emkay Global Financial Services, through which the bulk of the trading activities of the group were executed. “Their systems to generate alerts on such clients and trading behaviour would be examined in the course of investigation which is underway,” said its order.
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