Price rigging, market manipulation cases up

There has been a rise in the number of cases of stock market manipulation and price rigging, according to the Securities and Exchange Board of India (Sebi). Out of the 76 new cases Sebi took up for investigation in 2008-09, about 68 per cent pertained to market manipulation and price rigging compared to 50 per cent in the previous year. Other cases related to insider trading, violations of takeover norms, and irregularities in public issue and other market procedures, according to Sebi’s annual report released today.

Sebi completed probe into 95 per cent of the cases that it took up for investigation since its inception, it said. Sebi completed investigations in 1,223 cases out of 1,288 that it took up since 1992-93, said the report.

However, the number of cases in which investigation was completed in 2008-09 declined. In 2008-09 Sebi completed probe into 116 cases compared with 169 in 2007-08. The reason, Sebi said, was that there was a backlog of cases during 2007-08 in which substantial investigation was done during previous years.

The most high-profile cases handled by Sebi included the 1993 stock scam involving big bull Harshad Mehta and the 2001 stock scam involving Ketan Parekh. Both enabled Sebi to bring sea changes in capital market regulation.

On the alleged Satyam scam, Sebi said investigations were in progress and certain policy issues like peer review of working papers (relating to financial statements of listed entities) of auditors and disclosure of pledged shares arose after this case.

Taking forward its crackdown on the domestic mutual fund industry, Sebi asked 19 mutual funds to pay over Rs 22 lakh to investors for delay in dispatches in 2008-09. Reliance Mutual Fund paid the highest penalty of over Rs 12.9 lakh, followed by UTI MF, which paid over Rs 3.30 lakh, and HDFC MF, which paid over Rs 2.02 lakh.

Apart from Sebi, in 2008-09, the National Stock Exchange (NSE) initiated preliminary examination and investigation in 165 cases, whereas the Bombay Stock Exchange (BSE) initiated investigation in 961 cases.