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SEBI suspends 3 more brokers: share price manipulation case

The Securities and Exchange Board of India has ordered the suspension of three stockbrokers for their involvement in the price manipulation in the shares of BPL, Videocon and Sterlite during June 1998 which led to a sudden payment crisis on the country's leading bourses.

On August 26, SEBI had suspended three other stockbroking firms in the same case.

SEBI has ordered the suspension of the registration of Satyanarayan Nangalia, member of the Bombay Stock Exchange, Valfin Financial Services and Asian Securities and Stock Limited (both members of the National Stock Exchange) for violating the provisions of the SEBI Act 1992 read with SEBI (provisions of fraudulent and unfair trade practices relating to securities market) Regulations 1995, SEBI (stock brokers and sub- brokers) Regulations 1992 and its code of conduct and bye-laws of the exchange where they are members.

It was found during the SEBI investigations that these brokers were involved in the manipulation of prices of these scrips and they dealt for a common set of clients like Damayanti Group for the first time who did not have any professional expertise in the securities market and financial soundness to deal at such large scale.

These brokers, acting in concert with other brokers, cornered a very large quantity of shares of BPL, Videocon and Sterlite and created artificial market and manipulated the prices of these scrips and upset the equilibrium of the market.

The suspension would be for three years in case of Satyanarayan, till June 14, 2001 and in the case of Valfin Services and Asian Securities the members are suspended for a period of 18 months till December 16, 1999 and February 16, 2000 as the period of suspension has been reckoned after taking into account the period of suspension of trading terminals of the members by the respective exchanges.

SEBI has conducted investigations following sudden payment crisis in the month of June 1998 on the BSE and the NSE and allegations of manipulation in the scrips of BPL, Videocon and Sterlite.

Investigations prima facie revealed that some brokers acting in a concerted manner for common set of clients built up unusually large positions in these scrips resulting in distortion of the market equilibrium and creation of artificial market.

The investigation also brought out that these common set of clients were acting as a front for Harshad S Mehta, a suspended broker of the BSE and an accused in the Securities Scam of 1992.

UNI

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