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Snowcem barred from market
BS Markets Bureau in Mumbai |
December 10, 2003 09:48 IST
The Securities and Exchange Board of India (Sebi) has restrained Snowcem India Ltd from accessing the securities market and dealing in securities for two years. This order has been passed for violating trading regulations.
Sebi had conducted an investigation into the rise in the company's share price during June-August 1999. According to Sebi, during this period "a spurt in the volumes was also noted compared to the period prior to June 1999, when it was observed that the scrip of Snowcem India was not very liquid".
Following its usual practice, the securities watchdog called for trading details in the scrip from all the exchanges that it was listed in, specifically the Bombay Stock Exchange and the National Stock Exchange.
After analysing the details, it was observed that some entities associated with or close to Snowcem had been actively involved in the trading of its shares during the relevant period, resulting in unusual spurts in price and traded volume. It was also observed that in some settlements, their contribution was as high as 90 per cent of the total market activity.
Thereafter, Sebi ordered an investigation into the price manipulation in the scrip and summons were issued to the clients, brokers as well as company personnel to appear before the investigating authority.
Investigations revealed that there were transfers of funds from the account of the company to Kosha Investments, one of the promoter companies of Snowcem, and from there to the accounts of its brokers and sub-brokers.
These transfers were not merely loan transactions but a process by which the company transferred funds to Kosha Investments' account, which were then utilised by it to meet its settlement obligations with various brokers and sub-brokers towards the shares of the company that were purchased by it.