Castor seed case: Sebi eases restrictions on 18 entities

Sebi today relaxed restrictions on 18 entities that were barred from the securities market for alleged manipulations in trading of castor seeds at the NCDEX, following pleas to protect their portfolio from market volatility.

With the latest order, the watchdog has allowed the 18 entities, including Ruchi Soya Industries and National Seed and Agro Industries Ltd (NSAIL) to sell securities in their respective demat accounts subject to certain conditions.

Cracking the whip on irregularities in the commodities derivatives market, Sebi, earlier this year, imposed ban on 18 entities. The matter pertained to alleged fraudulent and manipulative trading in castor seeds at the NCDEX.

In a three-page order today, Sebi Whole Time Member Mahalingam said the entities can sell securities lying in their demat accounts, as on the date of the interim order, other than the shares of the companies which are suspended from trading by the concerned stock exchange.

The same should be done in an "orderly manner under the supervision of the stock exchanges so as not to disturb the market equilibrium and deposit the sale proceeds in an interest bearing escrow account with a nationalised bank".

Besides, the 18 entities can tender such shares in any "open offer/ delisting offer/ buyback offer".

They have also been permitted to avail the benefits of rights issue, bonus issue, stock split and dividend, among others.

The latest order has been passed after majority of them raised a common concern over possible erosion of value of securities consequent to the directions effecting immediate freezing of their demat accounts.

"... upon hearing the submission of the entities in general, I find it necessary and expedient in the interest of investors and the integrity of the securities market to address the issue of portfolio exposure to market volatility," Mahalingam said.

While giving the relaxations, he also said the directions are "general in nature and shall not prejudice the findings of investigations being conducted in the matter".

In a separate order, Sebi has allowed NSAIL to proceed with its Qualified Institutional Placement (QIP) issue as approved by the company's board and shareholders.