Sebi bars 19 entities from market for triggering a fall in 4 midcap stocks

The Securities and Exchange Board of Indiahas barred 19 entities and people from trading in the securities market on the grounds that they had joined hands to trigger a collapse in four stocks last week. 

The market regulator, in an interim order released late on Friday evening, said these entities and people had made a "concerted attempt to artificially manipulate" prices of four stocks - Pipavav Defence and Offshore Eng, Glodyne Technoserve, Tulip Telecom andParsvnath Developers - on July 26. 

Sebi said the accused entities continuously sold the shares at prices lower than the last traded prices to bring down the share prices. On July 26, Tulip fell 26%, while Pipavav, Glodyne and Parsvnath fell roughly 20% each. In contrast, the Sensex fell 1.2%, while the BSE's mid- and small-cap indices had dropped 2% each on that day. 

"Normally, a seller would desist from revealing its entire sell quantity since that may cause the supply-demand balance to immediately become unfavourable to the seller. The data for the short period of time in each scrip indicates several instances of fully disclosed orders which were also a significant factor in causing the sharp decline....in the price of each scrip," said Sebi's whole-time member Rajeev Kumar Agarwal in the 22-page order. 

Some of the entities and people barred by the regulator include Ajit Kumar Jain, Milestone Shares & Stock Broking, Manish Agarwal and Umang Nemani. 

The regulator's preliminary investigations revealed that these entities are related to each other. Sebi said in the six months prior to July 26, the trading of some of these entities was mainly concentrated in these stocks. 

"Their sale orders of substantial quantities were mainly placed as fully disclosed orders with a view to create an impression of huge selling pressure at the time of start of the trading," the order said. 

The regulator, in its investigation, noticed that the four stocks fell simultaneously between 9:15 am and 9:49 am. In the 15 days prior to the stocks' fall, there were no price-sensitive disclosures to the stock exchanges by the four companies, Sebi said. 

"It is noted that the trading pattern of a few of the above clients, along with other entities in various scrips, including some of the aforesaid scrips, for different periods is under examination of Sebi," the regulator said. (Economic Times)