Midcap crash: SEBI relief to 6 firms, bar against 2 to continue
Market regulator SEBI Thursday revoked its earlier order barring six entities which were initially found involved in the share price plunge in some mid-cap stocks, including Parsvnath, Tulip Telecom and Pipavav Defence.
Mumbai: Market regulator SEBI Thursday revoked its earlier order barring six entities which were initially found involved in the share price plunge in some mid-cap stocks, including Parsvnath, Tulip Telecom and Pipavav Defence.
However, the board continued its gag order against two firms - Gajria Jaayna Precision Industries and Passion System Solution -- passed on August 3 by confirming their suspension from trading after finding "prima facie" evidence against them.
The firms which got relief from the earlier securities market ban are -- A to Z Steels, G N Credits, Premium Hospitality Services, 4a Financials Securities, Venus Infosoft and Neelanchal Mercantile.
"In view of the foregoing, I, in exercise of the powers conferred upon me... Hereby confirm the directions issued against Gajria Jaayna Precision Industries and Passion System Solution and revoke the directions issued against A to Z Steels, G N Credits, Premium Hospitality Services, 4a Financials Securities, Venus Infosoft vide ad-interim ex-parte order dated August 03, 2012," said SEBI in an order passed by its wholetime member R K Agarwal on December 19.
Passing a separate order, Securities Exchange Board of India also revoked ban against Neelanchal Mercantile.
Meanwhile, the board made it clear that investigation in this issue is still going on and SEBI may take a final view and necessary actions after that.
Regarding the six entities, SEBI observed that at this stage, the case has not been made out that their trades were part of any alleged plan and the investigation in the matter was still in progress.
"It is noted that the notice has already undergone restraint for more than four months pursuant to the interim order. In my view, in the facts and circumstances of the case, the balance of convenience is in favour of the A to Z, GN Credits, Premium, 4a Financials' and Venus at this stage," said SEBI.
However, regarding the two entities, SEBI said, "Gajria and Passion have not been able to make out a prima facie case for revocation of the interim order as against them and the material available on record justifies the continuation of the directions passed against 'Gajria' and 'Passion' issued under the ad interim ex-parte order dated August 3, 2012".
Passing an interim order on August 3, 2012 SEBI had barred 19 entities from the securities market after an initial probe into share price plunge in some mid-cap stocks, including Parsvnath, Tulip Telecom and Pipavav Defence.
The entities were restrained from accessing market and prohibited from buying, selling or dealing in securities in any manner whatsoever included 4a Financials Securities, A To Z Steels, Ajit Kumar Jain, Cheminare Trade Comm, G N Credits, Gajria Jayna Precision Industries, Kuvam Plast Pvt Ltd, Littlestar Vanijya Pvt Ltd, Manish Agarwal and Milestone Shares & Stock Broking Pvt Ltd.
The others among the 19 barred entities include Neelanchal Mercantile Pvt Ltd, North Eastern Publishing & Advertising Co, Passions System Solution, Premium Hospitality Services, Ramkripa Securities, Umang Nemani, Venus Infosoft, White Horse Trading Co and Yashika Holding Pvt Ltd.
The matter relates to a sharp plunge of 20-26 percent in the shares of Parsvnath Developers, Pipavav Defence and Offshore Engineering, Tulip Telecom and Glodyne Technoserve on July 26 at the BSE and NSE.
SEBI in its interim order had said that a sharp downward movement was noticed in these stocks between 0915 and 0949 hours on that day. These stocks witnessed sharp intra-day price volume movement on both BSE and NSE on July 26, although no major corporate announcements or price sensitive information was disclosed to the exchanges by these companies during previous 15 days.
After analysing the trading activity of major clients, NSE and BSE found that some of these clients were not only common across these scrips but they also traded on both the exchanges.
A further probe into the matter found that the top identified clients whose sell volume constituted a significant share of the total sale transactions in these stocks accounted for up to 95 percent of the total sale transactions.
SEBI had said the analysis of trade data showed that these traders were instrumental in pushing down the prices of the concerned stocks, as they were observed to be placing the sell orders below the best sell prices as well as the best buy prices available on various occasions.
Also, during the day, many entities related to the some of the traders were top net sellers in these scrips.
The regulator further said relationships have been established among some of the clients as per information available in its surveillance system, KYC details available with the stock exchanges, MCA databases and other publicly available sources.