BSE slaps Rs 5 lakh fines on 222 brokers for re-listing rigging

Written by Markets Bureau | Mumbai, Jun 20 | Updated: Jun 22 2008, 04:46am hrs
The surveillance and supervision department of the BSE has imposed a fine up to Rs 5 lakh to the trading members involved in the price manipulation of KGN and Sylph Technology, BSE said in a circular on Friday.

The list of trading members which attracted the fine includes almost all the top rug trading members of the exchange. Around 222 trading members attracted fine for the involvement in the stock manipulation of KGN and 118 members in the stock manipulation of Sylph Technology. The list of erring brokers include Angel Broking, Karvy, Geogit, India infoline, Anand Rathi, Asit C Mehta, Motilal Oswal, Kotak securities, Sharekhan and goes on.

The stock of Sylph had soared to Rs 55,000 on re-listing post seven year suspension on May 21 and only 827 shares had exchanged hands at the BSE while on May 22, Sylph Technology repeated the trend surging by 1,00,000% intra-day from 80 paise to Rs 800 before finally closing at Rs200. Both the stock did not attract any circuit filter as the same is not applicable for the company getting re-listed.

The argument put forward for not imposing circuit brakers is to help better price discovery.

"It was observed that some of the trading members have entered orders at unrealistic prices in these two stocks, which has disturbed the market equilibrium. In view of the same, it has been decided to impose a fine up to Rs 5 Lakh on such trading members" said the BSE circular.

A compliance officer with a broking member involved in the issue said, "Some clients, seeing the rise in the prices may have punched in the orders, but none of the trades were executed at our terminal so the fine would not be that significant and it must be true for many other broking firms. As the trades were not executed, the fines would be less and directly deducted from the deposit money kept with the stock exchange".

Meanwhile, one more stock of the Z-category, Mid India Industries Ltd surged by more than 2000% on Friday in intra-day trades to finally close at Rs 8.15, posting a gain of 805.56% or Rs 7.25 for the day. The stock traded at a price of Rs0.90 in the previous trading session and around 17,000 shares changed hands on Friday as against its two week average quantity of around 2,000 shares.