Angel Broking penalised, no new clients for two weeks

MUMBAI Wed Jan 30, 2013 8:01pm IST

An investor watches the share index at a local share and stock market in Chandigarh June 18, 2012. REUTERS/Ajay Verma/Files

An investor watches the share index at a local share and stock market in Chandigarh June 18, 2012.

Credit: Reuters/Ajay Verma/Files

Stocks

   

MUMBAI (Reuters) - The 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.

The Securities and Exchange Board of India (SEBI) accused Angel Broking of working in tandem with the three other brokerages to generate the bulk of trading activity in shares of Sun Infoways Ltd (SUNI.BO) from February 5 to March 2 in 2001.

Shares of Sun traded in the range of 342 to 296 rupees during that period, after which shares slumped to as low as 60.75 rupees on April 30, 2001, while trading volumes "reduced drastically," the SEBI said on Wednesday.

The artificial pumping of trading volumes to generate interest from other investors and push up share prices is widely referred to as "circular trading" in India.

SEBI rejected Angel Broking's 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 regulator's statement.

"The occurrence of such synchronized deals in a circular manner persistently cannot be said to be a co-incidence as the shares were being rotated intra-day within a closed group and there was no change in the beneficial ownership of the shares," SEBI said.

The regulator said such a pattern of deals created a false impression of active trading in the shares.

SEBI barred Angel Broking from taking on new customers for two weeks starting 21 days after its statement on Wednesday. Allwin Securities Ltd and Bharti Thakkar India Securities Pvt Ltd also received the same penalty.

In addition, SEBI suspended the certificate of registration for brokerage N.C. Jain for one week.

"Management is looking into the matter and a suitable action would be taken soon," a spokeswoman at Angel Broking said when contacted by Reuters.

Officials from Allwin, Bharti Thakkar and N.C. Jain were not immediately reachable.

(Reporting by Rafael Nam. Editing by Jane Merriman)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Literary Giant Dies

Literary Giant Dies

Nobel winner Garcia Marquez, master of magical realism, dies at 87.  Read 

Election 2014

Election 2014

India holds biggest day of voting with BJP gaining strength  Full Article | Full Coverage 

Insider Trading

Insider Trading

Ex-Goldman director Gupta starts prison term on June 17.  Full Article 

Market Eye

Market Eye

Sensex jumps 351 points, snaps 3-day losing streak  Full Article 

Expansion Plans

Expansion Plans

Reliance Industries, HPCL Mittal plan refinery expansions.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Deal Talk

Deal Talk

Piramal to buy 20 percent stake in Shriram Capital for $334 million.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage