On the possibility of promoter-broker nexus, the investigation report says that though HFCL gave Rs 550 crore to KP entities during January-March 2001, there are no indications so far that promoters were involved in price manipulation. The end utilisation of funds by KP group is being examined by the department of company affairs (DCA).
The investigation report has recommended action against entities belonging to Ketan Parekh, DK Singhania, Sanjay Khemani for creating artificial volumes through purchase and sale across large number of brokers at the National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and the Calcutta Stock Exchange (CSE).
As per Section 11, 11B of the Sebi Act 1992 and Regulation 11 of Sebi (Prohibition of fradulent and unfair trade practices relating to securities markets) Regulations 1995, action has been recomended against NH Securities Limited, Classic Share and & Stock Broking Services Limited, Dinesh Kumar Singhania & Co, Doe Jones Investments & Consultants Pvt Ltd Arihant Exim Scrip Pvt. Ltd, Tripoli Consultancy Services Pvt Ltd, Panther Fincap and Management Services Ltd, Luminant Investments Ltd, Chitrkut Computers Pvt Ltd, Panther Investrade Ltd.
Apart from entities, action has been recommended against AK Poddar, Prema Poddar, Raj Kumar Poddar, Ratan Lal Poddar, Sanjay Khemani, N Khemani. Sebi had ordered an investigation into the affairs relating to buying, selling or dealing in shares of HFCL on March 20, 2001.
So far, HFCL has submitted four interim reports on HFCL in Sept 2001, Dec 2001, Feb 2002 and Sept 2002.