SEBI bans seven firms, five FIIs for manipulating GDR trade

The Securities & Exchange Board of India has banned some 20 entities from issuing shares or convertible debentures, or trading on Indian bourses, on grounds of stock price manipulation through misuse of global depository receipts (GDRs) which are listed abroad.

Among those banned are five foreign institutional investors (FIIs), five broking houses, six companies, and related entities. SEBI said these entities were colluding to rig prices and create artificial volumes in certain stocks.

In a 44-page order on Wednesday, SEBI directed India Focus Cardinal Fund, MAVI Investment, KII Ltd, Sophia Growth (Somerset India Fund) and European American Investment Bank AG, or all their arms registered with the regulator, not to deal in the Indian market either directly in stocks or instruments based on Indian shares, like futures, options, and depository receipts.

The market regulator also barred Basmati Securities, Oudh Finance & Investment, Alka India, SV Enterprises and JMP Securities - all brokers - from dealing in the market.

Besides, Asahi Infrastructure & Projects, IKF Technologies, Avon Corp, K Sera Sera, CAT Technologies, Maars Software International and Cals Refineries, all listed companies, are also ordered not to make any fresh issue of shares or instruments linked to shares till further orders.

A SEBI investigation found that these FIIs and the brokers were dealing heavily in the GDRs of these companies, where mostly the FIIs were the sellers while the domestic brokers were the buyers.