A day after unearthing large-scale manipulation in the share prices of six companies on the day of their listing, the Securities and Exchange Board of India is probing the motive of the seven barred entities, since their modus operandi of creating artificial demand for shares by itself did not result in their making profits.
A senior SEBI official said the regulator was probing all angles, including a possible nexus between promoters and the entities named in the regulator's investigation order late on Thursday.
"Our order (over share price manipulation on listing day) is only interim in nature. We are probing further and you can expect more orders in this case," said the official on condition of anonymity.
Another angle being probed by SEBI is whether the barred entities were acting in concert with grey market operators. Grey market operators in the primary market benefit by betting on stocks before they get listed.
Incidentally, share prices of all the companies named in the SEBI probe doubled in the first few days of their listing.
The regulator is also probing if the companies in which price manipulation occurred made private placements to these entities before their IPOs.
The companies whose share prices were manipulated on debut trading day were Mindtree Consulting, Shree Asthavinayak Cine Vision, Pyramid Saimira, Pochiraju Industries, Cambridge Technologies, and Al Champdany Industries.
Al Champdany was transferred from the Calcutta Stock Exchange to the Bombay Stock Exchange.
SEBI barred seven entities from the stock market for manipulating the share prices of the companies by creating an artificial demand for their shares.
The entities -- Latesh Chheda, Viren Kenia, Bhavin Chheda, Chetan Rathod, Neptune Fincot, Dhiren Pajwani, and RSS Investment -- gave abnormally large orders of shares at prices much below the prevailing market prices, besides unusually revealing their large order quantities in full.
While it created a false sense that there was a huge demand for shares, the SEBI probe found that the entities later withdrew the orders.
Simply making an order booking manipulation on the day of listing would not render the entities any gains, sources said.
"It is possible that they may have built up huge positions in these counters before they placed big orders in the stocks," the SEBI official said.
