that it had utilised the proceeds of preferential allotment amounting to Rs 30 crore for purchase of a land, it was found to be incorrect.
This seemed to be only a part of the scheme. On March 12, 2013 when the lock-in period of the equity shares allotted to the 28 entities of the Ranka Group (i.e., allottees other than the promoters) under the purported preferential allotment expired, they started trading heavily in the stock and took its trading volume up from an average of around 38,000 shares (between January 1, 2013 and March 12, 2013) to over 28 lakh shares between March 13, 2013 and October 18, 2013.
Sebi noted, “During the period (March 13, 2013 to August 20, 2013), the Ranka Group bought a gross quantity of 12,11,21,440 shares and sold a gross quantity of 20,72,46,229 shares. Thus, the entities of Ranka Group had altogether sold a net quantity of 8,61,24,789 shares till August 20, 2013.”
It further noted that in the period between August 21, 2013 to October 18, 2013 the entities of Ranka group bought a gross quantity of 2,59,31,404 shares and sold a gross quantity of 12,08,06,688 shares and thereby sold a net quantity of 9,48,75,284 shares from August 21, 2013 to October 18, 2013.
Sebi in its order said, “Once Sebi started inquiring into the matter, the Ranka Group has started dumping and exiting their position in the scrip. It is noted that till October 18, 2013 they have sold a net quantity of 18,10,00,073 shares, thereby making the profit of Rs 6,00,11,512,” which it has now ordered them to deposit in an escrow account in a period of 30 days.
Learning for investors
The above case clearly shows the sophistication with which fraudsters collude to cheat retail investors and in this case they seem to have worked on a plan for over 18 months.
While it is Sebi’s task to protect investors from such manipulators and from people raising money through ilegitimate collective investment schemes, investors too need to learn and act responsibly when it comes to investing their hard-earned money and not let greed take over wisdom.