NEW DELHI, 1 October 2005 — India’s stock market regulator has barred 11 brokers of the Calcutta Stock Exchange from trading after finding that they manipulated the shares of several companies.
The 11 brokers were found to have “artificially” jacked up prices in shares of six companies, the Securities Exchange Board of India (SEBI) said in a statement released late Thursday.
They created huge trading volumes in the shares “through continuous self deals executed on the same terminal and cross deals among themselves,” the statement said.
The companies whose stocks were manipulated included Prime Capital Market Ltd., Subh Laxmi Projects Ltd., Bankam Investments Ltd., S. T. Services Ltd., Amluckie Investment Co. Ltd., and Global Capital Market Ltd.
All of them are based in the eastern Indian city Calcutta. Global Capital Market is also listed on the Bombay Stock Exchange.
The exchange board said that the rise in stock prices of these companies came despite poor or negative financial performance. The brokers’ actions posed a serious risk to the stability of the settlement system in the stock markets and trap investors into holding on to fundamentally weak shares, it added.
The ban came a day after the regulator, for similar reasons, banned trading in stocks of two small companies listed on the Bombay Stock Exchange. Indian stocks have soared in the past four months, with the benchmark index of the nation’s main Bombay Stock Exchange — Sensex — hitting an all-time high of 8,650 points on Thursday. Many say India’s booming economy has fueled the current rally, driving demand for Indian stocks from foreign investors. There have been fears, though, that some market players could be manipulating select share prices.
