The Securities and Exchange Board of India (Sebi) has barred Angel Broking from taking on new customers for two weeks and set penalties on three other small brokerages for artificially boosting trading volumes in shares of a software developer more than a decade ago.
A probe conducted by Sebi in the scrip of Sun Infoways during February-May 2001 found that there was consistent fall in companys share price accompanied by low delivery. During that period, Sun Infoways had fallen from Rs 342 on February 5, 2001 to a low of Rs 60.75 on April 30, 2001 before finally closing at Rs 73.75 on May 2, 2001.
According to the order, circular or reversal trades were executed by certain brokers forming part of few groups in the the companys share. Such trades created artificial volume to the tune of 5.43 lakh shares in 37 days out of 50 trading days and had also generated 26-97 per cent of the daily volumes. These trades had resulted in a significant fluctuation in the companys share price.
Sebi rejected Angel Brokings response that it had acted purely as a stock broker for a client. Angel Broking had also stated there was no evidence on record it had acted as part of a group in collusion with one other, according to the Sebi statement.
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