SEBI bars 19 entities for price manipulation

The Securities and Exchange Board of India has barred individuals and entities from trading in the securities market on the suspicion that they had joined hands to trigger the crash of four mid-cap stocks on 26 July.

The barred entities include 16 companies and three individuals. Investigations by the National Stock Exchange and the Bombay Stock Exchange found that they had sold large chunks of shares on that day, which cannot be passed off as normal trades, the SEBI order noted.

The 19 entities have been barred ''from accessing the securities market'' and further prohibited them from ''buying, selling or dealing in securities in any manner whatsoever till further directions", the order signed by SEBI whole-time member Rajeev Kumar Agarwal said.

"In the light of the preliminary findings in this matter ... I am of the view that this is a fit case where, pending detailed investigation, effective and expeditious action is required to be taken to prevent any further harm to investors and securities market," the order said.

On 26 July, the stock price of Tulip Software crashed over 45 per cent in intra-day trade and closed 26 per cent lower, while Parsvnath Developers, Pipavav Defence & Offshore Engg and Glodyne Technoserve crashed 20 per cent each. The BSE's Sensex fell just 1.2 per cent, while its BSE's mid- and small-cap indices had dropped 2 per cent each on that day.

The persons and entities barred are 4a Financial Securities, A To Z Steels, Ajit Kumar Jain, Cheminare Trade Comm, G N Credits, Gajria Jayna Precision Inds, Kuvam Plast, Littlestar Vanijya, Manish Agarwal, Milestone Shares & Stock Broking, Neelanchal Mercantile, North Eastern Publishing & Advertising, Passions System Solution, Premium Hospitality, Ramkripa Securities, Umang Nemani, Venus Infosoft, White Horse Trading, and Yashika Holding.

SEBI said the accused entities continuously sold the shares at prices lower than the last traded prices to bring down the share prices.

"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," SEBI noted in a 22-page order.