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Parekh used CSFB to rig GTB scrip: Sebi

Sangita Shah & Rakesh P Sharma

The Securities and Exchange Board of India has found that broker Ketan Parekh used Credit Suisse First Boston to put through his cross-deals.

In his order of May 16 on the case pertaining to the Sebi action against Triumph International Finance (India) Ltd, Sebi chairman G N Bajpai noted that Ketan Parekh and TIFIL had manipulated the share prices of Global Trust Bank between October 11, 2000 and November 20, 2000.

"There was concentration in both purchases and sales in the stock during this period. This was concentrated among a few brokers," Sebi said in its order.

On the Bombay Stock Exchange (BSE), three brokerages accounted for 81.23 per cent of the total net purchases. Sebi has identified these brokerages as Triumph Securities Ltd (39.42 per cent), Indsec Securities (34.24 per cent) and Hem Securities Ltd (7.57 per cent). Again on the BSE, Triumph Securities (36.16 per cent), Indsec Securities (14.57 per cent) and Credit Suisse First Boston (27.04 per cent) accounted for 77.77 per cent of the gross purchases on the exchange.

On the BSE, CSFB alone accounted for 77.49 per cent of the total net sales in the stock. On the NSE, TIFIL (28.92 per cent), CSFB (20.03 per cent), NH Securities (14.95 per cent) and Woodstock Securities (10.65 per cent) accounted for 74.55 per cent of gross purchases on the exchange. On the NSE, TIFIL (27.54 per cent) and CSFB (35.85 per cent) accounted for 63.39 per cent of the gross sales on the exchange, Sebi has documented in its detailed order.

"These entities were basically dealing for KP entities. These figures were not disputed by TIFIL nor were explained by them. These figures indicate a clear artificial concentration and the transactions, among others, have resulted in the distortion of the price discovery mechanism of the market," the Sebi order says.

"It has been observed that Classic Credit sold 2.4 million shares to Brentfield Holdings through TIFIL by way of a cross-deal on October 23, 2000. Brentfield in turn sold these shares through CSFB to Vidyut (Indsec Securities, the buying broker) on November 7, 2000. Vidyut in turn lent these shares back to Classic Credit and Panther Fincap. This clearly establishes the complicity of TIFIL in the creation of volumes and an artificial market, as an entity of the Ketan Parekh group," Sebi said in para 10.7.8 of its order.

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