The Securities and Exchange Board of India ignores various kinds of manipulation by this stock broking company

Sucheta Dalal

Is SEBI extraordinarily soft on the Ashika group, for some reason? Judge for yourself. The group entities are so openly involved in various kinds of market manipulation, that it would be hard for SEBI to ignore it entirely. But the penalty is always so mild—it seems like a slap on the wrist. As Moneylife reported in March, Ashika Stock Broking was among the favoured intermediaries which received an ‘administrative warning’ for indulging in synchronised trading in shares of HFCL Infotel (in 2008). This is just a reprimand without punitive action. SEBI has yet to explain how these ‘administrative warnings’ figure in its regulatory structure at all. In 2008, Ashika Stock Broking paid Rs5 lakh as a fine and filed consent proceedings in a case involving fraudulent and unfair trade practices. SEBI’s adjudication order by D Ravikumar, a chief general manager, is delightfully opaque about the nature of its mischief and offers no explanation about why Rs5 lakh is considered an adequate settlement. Next is the Sanjay Dangi case, where SEBI conducted a detailed investigation into how nearly a dozen entities of the Ashika group, along with Dangi’s firms, were manipulating the shares of Ackruti City. Here too, it is probably the leak of an Intelligence Bureau report that forced a probe, rather than a quick burial through consent, payment and settlement. SEBI had then barred the Dangi entities as well as Ashika Stock Broking from markets. Isn’t it strange then that Ashika Stock Broking was involved in the withdrawal of shares in the Vaswani IPO? The SEBI member did not even comment on this in his order dated 11th July. Yet, on 19th July, there is another interim SEBI order in the Sanjay Dangi-Ashika-Ackruti case again by Dr KM Abraham. This time, SEBI dilutes charges against some ‘alleged’ Ashika group entities while reconfirming those against others. It also revokes its 2nd December ex parte order against Ashika Stock Broking, to the extent of permitting the acquisition of new clients, but restrains it from dealing in its own account. This means that it is business as usual for Ashika where other investors and entities are concerned. Will SEBI’s actions deter it from its habitual practices? Ashika Capital’s website claims its business is built on “uncompromising ethical standards!”

(This article was first published in the edition of Moneylife magazine dated 11 August 2011 that was available on the newsstands on 28 July 2011.)