The Securities Exchange board of India (SEBI) barred 7 companies from issuing any convertible instruments or issuing any fresh shares or altering their share capital structure. These companies had been barred on grounds of manipulation of GDR issues.SEBI had received alerts in 2009-10 regarding large scale of off market transaction.
In the past the Market regulator has found evidences of price manipulation by these companies. The seven stocks which are barred are Avon Corp, Asahi Infra, CAT Tech, Cals Refineries, IKF Technologies, Maars Software and K Sera Sera.
SEBI also barred 10 people and entities to deal in instruments or securities for their involvement in the issue. They are SV Enterprises, Alka India,,JMP Securities, India Focus Cardinal Fund, MAVI Investment, Sophia Growth, KII Ltd, European American Investment Bank Ag, Oudh Finance & Investment and Basmati Securities.It has also directed The NSDL and the CSDL (India) to freeze all accounts of the beneficial owner of the mentioned 10 person or entities. They should also ensure that in future these entities/persons should not hold or take any fresh positions.
The modus operandi used by these companies was that they issued shares in the form of GDRs (Global Depository Receipts). GDRs are those which are easily converted into domestic shares. The GDRs were cancelled and then sold in the Indian markets. There was no transparency in the system as the number of shares convertible from shares to GDRs or from GDRs to shares was not known. This process was used as a means to manipulate the share prices by the mentioned companies. The activity was noticed on these scripts and a detailed examination was carried out by SEBI
“Bell the bull says: The above case was a violation of FEMA regulation and SEBI has reported to Enforcement Directorate to take the matter further.”