20 Jun 07 Futures and Options (F&O) Scam
SEBI has unearthed a F&O scam where operators artifically maniplualated prices of futures and options contracts (f&o) traded in NSE by price rigging through circular trading in the futures and options (F&O) segment. SEBI is investigating the case and has not yet passed its final order. For now SEBI has passed a cease and desist order to the 10 entities and 14 brokerages involved. The order was passed by SEBI’s whole time director Anantharaman, the man who was instrumental in identifying the IPO Scam. The modus operandi involved buying and selling futures and options contracts in the NSE F&O market, at prices which were significantly different from the market price at which the underlying was trading, and then selling them off before the closing bell. Thus the volume was artificially jacked up. Some of the entities and brokerage firms involved in the scam are Indiabulls Securities, Angel Securities and SMC Global Capital markets.
12 Jun 07 DLF IPO, Cash Incentives and IPO scams
Inorder to aggressively push the DLF IPO to retail investors, brokerages and agents are pushing the IPO by using illegal methods like providing cash incentives to investors. A leading Indian daily reported that Kotak securities is offering very high commissions to brokerages on a per application basis. This money is not paid from K.P. Singh’s pockets. It would be charged as issue expenses and will be paid using the shareholders money raised through the IPO. At the end of the day the investment banks and lead managers make money and so do the brokerage firms and sub brokers, all at the cost of the poor retail investor. There is another type of incentive which is being offered where agents are paying investors upto Rs. 2500 for applying in the DLF IPO for DLF shares worth Rs. 99,000. On allotment, the DLF shares will be transferred to the agent who will pay the investor Rs. 2500. The agent will then pool all the shares and sell the shares in the secondary market and will make money if DLF does list at a huge premium to the issue price. Now, how different is this from the IPO scam involving Yes Bank and IDFC which rocked the markets about a year earlier? Is Mr. Damodaran and his team listening?
P.S. This scheme though illegal seems to provide good returns for investors with no risk (default risk does exist). The ROI offered is over 2.5% which translates to over 30% on an annualised basis. I wonder how the agents are so confident that DLF will offer higher returns on listing.
29 May 07 Ketan Parekh scam : Promoters of Adani Enterprises banned by SEBI
The promoters of Adani Enterprises, the flagship company of the Adani group, have been banned by SEBI from dealing in the stock markets, directly or indirectly, for a period of 2 years. Following this announcement, the share prices of Adani Enterprises tumbled. Adani Enterprises closed the day, down 10% at Rs. 212. I wonder how the promoters being banned from dealing in the stock markets, will impact the performance of Adani Enterprises in a drastic manner. Maybe the 10% fall is due to the theory of reflexivity?
