Sucheta Dalal :Positive Manipulation etc.
Sucheta Dalal

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Positive Manipulation etc.  

Mar 8, 2004

Manipulating sentiment is good when it helps government; a new rule has stock market intermediaries fingerprinting minor children and infants and other issues...(March 7,2004)


By Sucheta Dalal


Positive manipulation?

Over a week before the ONGC issue opened, it was well known that there was enormous international interest in subscribing to it – it was only a question of pricing it right. But an over subscription in ten minutes? Market circles know that institutional investors don’t bid in the opening minutes unless they are ‘persuaded’ of a plan to whip up sentiment. Moreover, they bid for a multiple of their real interest, knowing that they can reduce the size and price of their bids anytime before the book closes. That is why investment bankers love book-built issues. The initial high bids are nothing but market manipulation and it happened in the Maruti issue also. It persuades small investor to apply and encourages high networth individuals to make leveraged bids. But then, who complains about “positive” manipulation?


Mapin Infants

The Securities and Exchange Board of India (SEBI) is creating a massive database of capital market intermediaries, mutual funds and promoters of companies and their families with photographic and biometric identification through finger printing. Each intermediary will be given a Unique Identification Number (UIN) which will allow the regulator to track wrongdoers, when they try to come back through different avatars. In its zeal however, the regulator has made no distinction between minor children of market intermediaries or separated minors, toddlers and infants. A large financial intermediary with multiple businesses is thus going through the bizarre process of fingerprinting and photographing the wives and infants of their employees in order to comply with rules before the March 31 deadline. Often, the kids are alarmed at the fingerprinting process and begin to howl. Although intermediaries are furious, they have either not complained or the regulator is not listening. Meanwhile everybody is hunting for the details of the stay ordered by the Delhi High Court on a plaint filed by a few NSE members.


Back in business

Remember Sanjay Khemani? He is the little known Kolkata broker to who received the largest chunk of the Rs 3191 crore transferred by scamster Ketan Parekh for investment through the Calcutta Stock Exchange when the bull run has already started to unwind. Nearly three years after the Khemani group’s dealings with the former bull operator, SEBI has suspended Sanjay Khemani’s card for two years. But since the punishment covers the period when the broker was prevented from stock market dealing while the inquiry was pending, it means that the two Khemani group brokerages – Sanjay Khemani and N.Khemani will be back in business on March 20, 2004. Incidentally, the wife of one of the biggest scamster has also relocated to London and will soon restart one of his foreign brokerage cards as a Non-Resident Indian. This would mark another scamster’s return to the capital market, by taking advantage of SEBI’s slow and ponderous investigation and soft punishments.


Wrong billing?

As we have now found out, as many as 669 sitting and former MPs collectively owe Rs. 17.5 Crores to various utility services. While those of them who plan to contest elections have reluctantly paid up their electricity and telephone bills, most of them are complaining of wrong billing by the Mahanagar Telephone Nigam (MTNL). If true, why didn’t it occur to any of these representatives of the people to demand the streamlining or disbanding of MNTL? After all, if they are overbilled, what happens to the ordinary citizen? But the truth is that MTNL’s billing efficiency has increased enormously in the last few years.  And it is unlikely that the corporation would dare to load its irrecoverable bills on MP accounts. What is more interesting is the veiled threat by our netas that they will pay now and try and recover the bills later. This means that the Telecom Minister will be under pressure from the Rawales, Rizvis and Gawais to give them their money back. Do remember that these hefty bills are in addition to the extremely generous free calls allowed to our peoples’ representatives.  Politicians must learn to lock up their phones or monitor their usage like all ordinary tax-and-bill-paying citizens do.


Insurance disparity

At a seminar on dematerialisation of share certificates at Ahmedabad, investor groups learnt that the National Share Depository Ltd (NSDL) and the Central Depository Services Ltd. (CDSL), both had insurance cover to protect investors against depository fraud. But they were in for a huge surprise when they asked about the size of insurance cover. They learnt that NSDL which is a near monopoly with over 90 per cent of the depository market has a cover of Rs 25 crore, while CDSL with a market share of less than 10 per cent has a Rs 50 crore cover. Neither depository has disclosed the terms and conditions for making a claim, although CDSL has offered to make its policy details public. Maybe its time the SEBI took a hard look at this disparity. 

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-- Sucheta Dalal