The Sebi remark came in the wake of a cease and desist order passed by its whole time member G Anantharaman in the matter of Lalit Dua, a Sebi registered sub broker and his associates entities on indiainfoline.com in certain shares and dealing in those securities by them. Sebi restrained Lalit Dua from giving any recommendations about any investment in the securities market in any public media which amounts to violation of Sebis FUTP Regulations. Harshad Apte, associate vice-president, India Infoline said, As part of our investor service covering corporates, finance & capital markets we publish own research as well as research reports of other professionals. Some of such research reports were of Lalit Dua.
However, we have discontinued publishing his reports way back since August 2005. The broking company does not have any proprietery dealings in any scrips.
Sebi in its order said, as a part of its ongoing efforts to protect the integrity of the market, it was closely looking at this issue of misleading recommendations made to the public on stock picks and investment advices and tips on purchase and sales of shares/securities. This was done in close association with stock exchanges.
Such tips were often aired through the public media, by some of the regulated entities. During such exercise it was observed that Lalit Dua, used to disseminate company favorable articles in media on a frequent basis projecting a bright future of companies whose shares are thinly traded.
Thereafter, in contrast to the recommendations, his associated entities used to offload shares (purchased prior to the recommendations) of such companies on the back of induced investor interest created by his recommendations.
It was also prima facie noticed that promoter shareholding had decreased in several such scrips wherein recommendations had been given.
This prima facie also pointed to the role of the promoters of the companies in the scheme of things, Sebi said.