The Securities and Exchange Board of India has unearthed large-scale price manipulation in six companies, including MindTree Consulting, on the day of listing and banned seven entities from trading at the stock exchange.
While barring the seven entities -- Latesh Chheda, Viren Kenia, Bhavin Chheda, Chetan Rathod, Neptune Fincot, Dhiren Pajwani and RSS Investment -- from the market, Sebi said large orders were placed much below the prevailing market price on the day of listing, thereby rendering them as frivolous orders making no commercial sense.
The other recent listings in which such price manipulation occurred are Pochiraju Industries, Cambridge Technologies, Shree Astavinayak Cine Vision, Pyramid Saimira, and Al Champdany.
"The intention of placing such orders was therefore not for genuine trading but only for artificially enhancing the levels of demand," the Sebi order said.
The entire large order quantity was revealed to the market in one stroke, which is an uncommon practice in the market. Sebi was able to unearth the manipulation through its recently installed Integrated Market Surveillance System.
A genuine buyer of a large quantity of shares would not like to disclose the entire size of intended purchase as it would normally impact the price. "Therefore, it is prima facie seen that such conduct might not be consistent with anything other than market manipulation," the regulator said.
Earlier, Sebi barred German brokerage house Dresdner Kleinwort Wassertein Securities (India) from the securities market for share price manipulation in DSQ Software in October 1999.