Sebi Suspends Divine Sec In Amara Raja Stock Scam

Chennai, January 21: | Updated: Jan 22 2003, 05:30am hrs
The Securities and Exchange Board of India (Sebi) has suspended Divine Securities, a sub-broker to Bang Equity Broking Pvt Ltd, for its alleged role in the stock rigging scam of Chennai-based Amara Raja Batteries Ltd (ARBL). The suspensions is for a period of two months effective January 27, 2003.

Sebi, in an order issued on Monday, said that it has investigated the role of brokers and sub-brokers of BSE and NSE in the manipulation of ARBL during the period August 2000 to March 2001. It was found that brokers and sub-brokers had violated the provisions of Sebi (Stock Brokers and Sub-brokers) Regulations 1992 and Sebi (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995. As a consequential action, an enquiry officer was appointed for taking action against the brokers and sub-brokers under appropriate regulations.

The enquiry officer has submitted his report to the board in respect of following sub-broker and observed that it was guilty of violating the provisions of Sebi Regulations, the Sebi order said.

Sebi after considering the facts, reply and its written submissions, found Divine Securities guilty of violating the provisions of Sebi (Stock Brokers and Sub-brokers) Regulations, 1992 and suspended Divine Securities for a period of two months with effect from January 27, 2003 for violating the provisions of Sebi Regulation, the order said. Earlier, Sebi had initiated criminal prosecution against brokers Harinarayan Bajaj and Rahul Bajaj for their role in creating an artificial market in the stock of Amara Raja Batteries Ltd.

The investigations conducted by Sebi revealed that the said individuals traded heavily in the stock with an intention to create a false market.

Sebi had ordered probe into the volatility in the Amara Raja Batteries stock following allegation that a group of 20 brokers at the behest of Harinarain Bajaj were engaged in circular trading to jack up the prices to abnormal levels and later hammering it down to rock bottom, thereby making a killing by duping the unsuspecting investors. Circular trading refers to trade among a clutch of brokers without actual delivery.