Securities and Exchange Board of India (Sebi) has barred Mumbai-based retail broker Angel Broking two other firms from bringing in new clients for two weeks, accusing them of aiding manipulation in Sun Infoways shares.
The regulator, in an order dated January 30, said these entities were involved in circular trades to create volumes in Sun Infoways from February 05, 2001 to May 02, 2001.
Sebi said its investigation during the period showed that circular trading by these entities had resulted in a rise in price and trading volumes of Sun Infoways, but the activity declined after they reduced trading in the stock.
In adition to Angel, the other two entities barred from acquiring clients for two weeks are Allwin Securities and Bharti Thakkar India Securities. Another broker NCJ Shares and Stockbrokers was barred for a week from taking up new clients.
The regulator said this ban would come into force on expiry of twenty one days from Wednesday.
“I note the argument of the notice (Angel Broking) that it had acted on the instructions of its clients and did not act in concert with any other client/ broker. However, from the trading pattern available on record, it can be reasonably inferred that the noticee was part of the group which gave a misleading appearance of active trading in the scrip,” said Sebi’s whole time member Prashant Saran in the order.
The Sebi order said the broker could not be delinked from the’collective nexus’.
“It is absolutely most unlikely that persons unknown to each other could trade continuously by placing orders in a circular manner and contribute significantly to the total volumes in the market,” the order said.
