Sebi, NSE ban 26 entities from trading in two cases

Moneycontrol Bureau

The Securities and Exchange Board of India (SEBI) and the National Stock Exchange (NSE) on Thursday banned 26 entities from trading in the stock market. The decision came at a time when both the authorities are conducting an investigation on the trading activity of Gitanjali Gems and Prime Broking Company, a subsidiary of Prime Securities. "Pursuant to the decision of SEBI and NSE, which are investigating the trading activity of Prime Broking Company (India) and trading in Gitanjali Gems by set of clients, Unique Client Code (UCC) in respect of following (26) entities/ persons are disabled from trading with immediate effect for a period of 6 months or till conclusion of investigation by NSE, whichever is earlier," the NSE said in a circular issued on Thursday. Must read: Here's how RBI move will help mutual fund investment  Banned entities The barred entities include Mehul Choksi, chairman and managing director of Gitanjali Gems and Prime Securities headed by N Jayakumar among the prominent ones. Some other banned entities are from gems and jewellery industry like Albers Diamonds, Avtar Gems, Magnifique Gems and Vankars Gems. Others include Fender Mercantile, Jaiwanti Mercantiles, Jindal Infratech, Jinal Mercantile, CSA Holding, CLT Investments, Trusha Infrastructure, Somerset Infrastructure and Sneaking Infrastructure. The rest are Manoj Madhav Vankar, Pinky Agro Foods, Prime Research, Primesec Investments, Rhoda Infrastructure, Rishabh Technomarine, Sadhvi Mercantile, Sancheti Properties, Sarvin Mercantile, and Shraddha Garments. Antecedents.... According to market participants, a majority of those banned companies do not have any credentials. They may not have more than Rs 1,00,000 paid up capital each. "Many of these companies are unheard of in the public domain," a trader who is a NSE member told moneycontrol.com, on conditions of anonymity. "They are ostensibly run in the names of fourth class staff of bigger companies. The action (ban) is fully justified. Moreover, the movement of share prices of Gitanjali Gems in the last three-four years raises many eyebrows. Some of barred companies were allegedly involved in a circular trading to jack-up prices," the person said. Gitanjali share price movement Gitanjali Gems had hit an all-time low of Rs 32.50 per share on March 26, 2009. However, it reached record high of Rs 649.70 a share on April 23, 2013. So, in a span of around four years, Gitanjali shares surged nearly 2,000 percent as against close to 100 percent rise in the 50-share Nifty; the broader index. "That was a phenomenal rise. Gitanjali shares were also included in the NSE Future & Option segment in 2011. Now, they remain excluded. The promoter spent huge sum in building the brand, which in turn has facilitated him in many ways like F&O inclusion or bank loans and so on," said another trader, who did not wish to be named. Prelude to Prime Broking Being an unlisted entity, Prime Broking however, was allegedly instrumental to some share deals, which were not be in compliance with regulatory norms, traders said. The NSE on June 28 had announced that it was conducting the investigation. It was also to issue a show-cause notice in the matter to Prime, according to media reports. Prime off late, has moved the Bombay High Court on the issue. They were asking for a stay order from being declared a defaulter. However, the court did not grant it.  saikat.das@network18online.com