The Securities and Exchange Board of India (Sebi) on Tuesday barred commodity-market players Ruchi Soya Industries and National Steel and Agro Industries from dealing in the securities market.
The order was passed in a case related to violation and manipulating as well as fraudulent dealings in castor seed derivatives in January on the National Commodity & Derivatives Exchange Limited (NCDEX).
The Tuesday order said Ruchi provided funds to five entities to take positions on its behalf. These entities created excessive long positions fraudulently, putting the market at risk. The exchange had to suspend the contracts on January 27. The Sebi order referred to bank entries showing how Ruchi had manipulated the market using these five entities.
A Ruchi Soya spokesperson said: "We are yet to receive the order formally from Sebi. We will examine the order in detail and will respond appropriately to the regulator. We are a law-abiding company and compliance with all applicable laws, rules and policies have always been our foremost priority."
NCDEX had detected a problem when castor prices started declining; the prices fell 25 per cent in January. Ruchi-led entities had then said they were not able to pay the mark-to-margin costs. NCDEX was then forced to suspend the contracts to avoid market-wide risk.
