The Sebi on Thursday passed strictures on four listed companies—Murli Inds, Ackruti City, Welspun-Gujarat Stahl Rohren and Brushman three broking firms, market operator Sanjay Dangi and other related entities for their role in market manipulation of these stocks spanning several years.
The Sebi order was the result of a detailed investigation into the activities of these groups which had its origin in a reference from the income-tax department in Nagpur.
Apart from the four listed companies, Sebi banned 10 entities belonging to the Sanjay Dangi Group, 14 Ashika Group companies, 18 entities from the Murli Industries Group, 13 Ackruti City entities, six Welspun Group entities and one from the Brushman Group from dealing in shares of their company or group entities.
It also ordered the stock exchanges to square off the positions of these entities in the derivatives segment and not to allow them to take fresh positions . The market regulator also ordered the listed entities not to alter their shareholding pattern till further orders.
The stock brokers—Sanchay Fincom, Sanchay Finvest and Ashika Stock Broking-—have been ordered not to buy, sell or deal in the securities in their own and proprietary accounts till further orders. These brokers were also directed not to enlist new clients with immediate effect. The Sebi investigation has shown that prima facie “the promoter of the company concerned had employed a scheme or a game plan for the subscription of their securities . To this end, the services of the hired group of entities controlled by Sanjay Dangi were employed to execute the same.”
The Sebi also said that the four companies—Murli Inds, Ackruti City, Welspun-Gujarat and Brushman—had raised funds through qualified institutional placements (QIPs) or foreign currency convertible bonds between 2007 and 2009.
The Dangi Group was found to have traded substantially in the shares of these companies around the same time. It was also seen to have manipulated the stock prices. The report of the capital market regulator also pointed out that its investigations showed “the connivance of promoters with the Dangi Group which helped them in achieving their goals by manipulating the trading in securities of their companies .”
In addition, the Securities Exchange Board of India report also pointed out that the Dangi Group and Ashika Group entities had “time and again come together in a coordinated manner serving much like mercenaries on hire for execution of fraudulent schemes in the securities market.” This actions were not acceptable to the market regulator.