Sebi bars 9 entities in alleged Ruchi Soya scrip manipulation

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The Securities and Exchange Board of India (Sebi) on Friday barred nine entities from dealing in the securities market for their alleged manipulative trade practices in the shares of edible oil producer Ruchi Soya Industries.

The banned entities are Aventis Biofeeds, Navinya Multitrade, Shreyans Credit and Capital, Betul Minerals and Constructions, Betul Oil & Feeds, Sunmate Trade, Uni24 Techno Solutions, Vision Millennium Exports and Moebius Credit and Capital.

In an interim order, Sebi said these entities are “restrained from accessing the securities market and further prohibited from buying, selling or dealing in securities in any manner whatsoever, till further directions”.

The order is based on the preliminary findings by the securities market regulator.

Sebi had received alerts regarding ‘marking the close’ in the scrip of Ruchi Soya for September 27, 2012.

‘Marking the close’ refers to the act of artificially impacting the closing price in the cash market, which acts as the settlement price in the derivative market.

Citing prima facie evidence, Sebi said these connected entities “indulged in ‘marking the close’ by moving the closing price of the scrip of Ruchi Soya in the cash market in an artificial, manipulative and unfair manner and thereby made unlawful gain on the long positions held by them in futures of the scrip”.

Based on alerts, the regulator had examined the trading pattern in the scrip of Ruchi Soya for September 27 and noticed significant movement in the price of the shares during the last half hour of trading.

The price of the shares had gone up 26 per cent during the last 10 minutes of the trading day.

Further, the price and volume movements in the scrip were mainly concentrated during the last three minutes of trading.

It was also noted that Ruchi Soya was removed from the derivative segment on September 27 last year, which was the expiry day of all derivative contracts under examination in the scrip of the company.

Sebi found the nine entities had heavily traded in the shares of the company at the NSE on the trading day.

“These entities were collectively holding long position in futures, to the extent of 71.96 lakh shares of Ruchi Soya,” Sebi said.