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Sebi starts probe into in-transit shares issue

Rakesh P Sharma & Janaki Krishnan

The Securities and Exchange Board of India (Sebi) has started investigation into in-transit shares and outstandings therein of various companies.

In a letter, dated March 23, Sebi has asked the National Securities Depository (NSDL) and the Central Depository Services (CDSL) to furnish data, exchange-wise and settlement-wise, in respect of the in-transit shares of companies including Infosys, DSQ Software, Global Tele-Systems, Himachal Futuristic Communications, Satyam Computer, Silverline Technologies, Rolta India and Zee Telefilms.

Sebi's move is part of an ongoing investigation into the alleged bear hammering in top technology stocks. It has been alleged that in several technology stocks, a significant quantity of shares were lying in-transit and concentrated among few large stock brokers.

Such large in-transit positions have a relation to the rise and fall in share prices. The role of some e-broking websites is also being probed, as these firms are known to be using clients beneficiary accounts for its own purpose.

As per data available with the two depositories, nearly 8.4 million shares of DSQ Software, which amounted to around 28 per cent of its paid-up capital, was lying in-transit as on February 23, a few days before the Budget announcement.

But a massive bear attack that followed in the subsequent four weeks saw an erosion of 65-70 per cent in the price of the scrip.

In Global Tele-Systems, it is reported, nearly 7 million shares or 16 per cent of its capital was in-transit before the Budget. The share price is now down 54 per cent to Rs 197 from Rs 438 on February 23. In some other case, the in-transit position is estimated to be as high as 25-30 per cent of the paid-up equity capital of the company.

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