MUMBAI Jan 30 India's market regulator 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 from Feb. 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
"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,"
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
(Reporting by Rafael Nam. Editing by Jane Merriman)