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SEBI suspends 3 brokers in share price manipulation case

Three leading brokers -- GNH Global Securities Limited, Mahico Limited and Star Share and Stock Brokers Limited -- engaged in the alleged price manipulation of BPL, Videocon and Sterlite scrips in June last year, have been suspended by the Securities and Exchange Board of India for a varied period ranging from 12 months to 36 months.

The magnitude of the manipulation by these brokers, acting as a front for big bull Harshad Mehta, was so large that it led to sudden payment crisis on the Bombay Stock Exchange and National Stock Exchange.

Both the exchange authorities, acting on the advice from SEBI, switched off the trading terminal of GNH Global Securities from June 15, Mahico Limited from June 22 to August 3 and again from January 4, 1999 onwards and in the case of Star Share and Stock Brokers, from December 5, 1998 onwards.

Later, SEBI initiated the detailed investigations and instituted an enquiry. It was found that these brokers dealt with a common set of clients under Damayanti Group. They did not have any professional expertise in the securities market nor financial soundness to deal on such a large scale in shares of BPL,Videocon and Sterlite. These brokers cornered large quantity of shares. This created artifical movement of prices and upset the equilibrium of the market.

Describing these three brokers as guilty of violating the provisions of the SEBI Act 1992 and Securities Market Rregulations, 1995, SEBI today announced the period of suspension that would be reckoned from the date of suspension in respect of GNH Global Securities, Mahico Limited and Star Share and Stock Brokers. The suspension will be effective respectively till June 14, 2001, December 31, 1999 and September 16, 1999.

UNI

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