Stepping up its surveillance on suspected entities involved in the misuse of stock exchange platform for unlawful activities including tax evasion, money laundering and market manipulation, market regulator Sebi had initiated investigation in 245 new cases during FY17, 84 per cent higher than FY16.
According to information disclosed in its annual report, 76 per cent (185 out of 245) of the cases taken up for investigation in FY17 pertained to market manipulation and price rigging compared to 63 per cent in FY16.
While insider trading and takeover violation cases accounted for 14 per cent (34 cases) and 1 per cent (3 cases) respectively, issue related manipulation and violation of other securities law accounted for 3 per cent and 6 per cent. “There was a comparative increase in the number of cases taken up during 2016-17 mainly due to the references received from the department of Income-Tax in the matter of long term capital gain or short term capital loss in various scrips,” the watchdog said.
In its inspection of depository participants like stock brokers and sub brokers, the regulator said discrepancy with regards to anti-money laundering (AML) regulations was observed against 529 entities. Sebi has already issued warning letters to 485 entities while it has imposed monetary penalty on 66 entities.
During the period, there were also several instances pertaining to the misuse of the primary market platform. Without naming the company, the regulator pointed out to an instance where the issuer company in collusion with the merchant banker siphoned off the proceeds from the initial public offering.
The issuer, contradicting its statement or disclosures in prospectus used the IPO proceeds to fund net buyers who supported the demand during the IPO subscription.