Market regulator Sebi has suspended stock broker, Parklight Investments, for one week following its alleged involvement in creating artificial volumes in the trading of Genus Commutrade shares.
In its order dated December 31, Sebi suspended "the certificate of registration of the noticee, Parklight Investments Pvt Ltd, a trading member of BSE for a period of one week".
Sebi (Securities and Exchange Board of India) had conducted investigation into the trading Genus Commutrade Ltd (GCL)shares for the period May 14-July 20, 2001 on the basis of an internal probe carried out by the stock exchange BSE.
At that time, Genus Commutrade shares were listed at BSE and the Ahmedabad Stock Exchange but was trading only at BSE.
The investigation had found that GCL scrip was highly illiquid and prior to the probe, there were only 12 trades for total 1,700 shares between January 2001 to April 2001.
During the investigation period, the scrip was traded for 50 days and the total traded volume in the scrip was 1.07 crore shares, according to the order.
The regulator said trades between the connected or related clients were executed by Parklight Investments on a regular basis during the investigation period leading to an inexplicable surge in volume and price of Genus Commutrade.
Moreover, there were no positive corporate announcements from Genus Commutrade at the relevant point in time and the financial of the company were also very weak, Sebi said.
"...Therefore, in the facts and circumstances of the case, find that such unusual trading should have alerted the noticee that something was amiss in those trades," Sebi noted.
Sebi also said that Parklight Investments, being a registered stock broker, "should have exercised professional prudence and due care and diligence and should have been more careful while executing the trades on behalf of its clients who connected/related amongst themselves and with noticee and GCL."
