BILT under the scanner

The Securities and Exchange Board of India (SEBI) has barred a dealer employed with UTI Securities, a sub-broker empanelled with Emkay Shares and Stock Brokers and 34 clients from dealing in shares of Ballarpur Industries.

(Bilt) till further notice. All these entities have been charged with front running, an activity in which a trader takes a position of unfair advantage in advance of a large buy or a sell order of a client.

The capital market regulator has also directed the 34 clients to deposit profits made by them, amounting to around Rs 66 lakh, with the National Stock Exchange of India (NSE) within 15 days from the date of issue of this order.

SEBI investigations revealed that a set of clients registered with Emkay Shares and Manish Innani, director of another broking firm, Prayas Securities, were dealing in the stock of Bilt, around the time of large sell orders by a foreign institutional investor (FII) Netherlandse FMO. The FII was observed to be selling its holdings in Bilt through UTI Securities on different dates between November 1, 2006 and June 13, 2007.

“Prima facie there appears to be a clear pattern in which Shri Raajeev Kasat, dealer of UTI Securities is seen to be passing information to Manish Innani at Prayas Securities and Rajeev Shroff at Emkay Shares and Stock Brokers. Rajeev Shroff in turn appeared to have passed on the information to a group of apparently set up clients, who indulged in ‘customised front running’,” the SEBI order said.

SEBI has directed UTI Securities and Emkay Shares to conduct an internal enquiry into the matter and initiate appropriate action against their employees or agents named in this order and submit an action report within 30 days of the order to the regulator.