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Journalism of Courage
The Integrated Market Surveillance System IMSS has helped the regulator detect a 8220;possible order book manipulation scenario that existed in the trading engines of one of the two stock exchanges8221;. The Securities and Exchange Board of India Sebi informed its board of directors at a recent meeting that this problem is now being plugged, but omits to say whether the systemic hole has ever been exploited by market operators. Instead, its bland surveillance report claimed that IMSS alerts have been helping it detect abnormal trading activity and market behaviour and that 120 letters have been dashed off to market intermediaries, either cautioning them or seeking an explanation. It is not clear whether the Sebi board questioned this information, especially when recent data shows that India is the third most volatile market in the world. The board was also provided details of the embarrassing first day flare up after a new listing or corporate restructuring/ merger/ demerger in share prices of companies such as Ahluwalia Contracts India and AI Champdany, but not MindTree, which had such a dizzy post-listing run-up that even its management was surprised. Here too, there is no information about large traders who may have ramped up the shares like in the Nissan Copper case. Sebi has merely asked the two national bourses not to relax first day circuit filters until they evolve a common policy for implementing price bands. Ironically, these cases of market manipulation have been glaringly evident to ordinary traders even without the benefit of an expensive and sophisticated surveillance system. The regulator is surely expected to be able to provide a lot more than mere price trends to its board.
Action time
Active surveillance
With stock prices looking wobbly, the promoters and large shareholders of certain companies are apparently getting ready to dump their stocks and book a profit. The two depositories have suddenly started receiving orders for dematerialisation of a large number of physical shares. Following a discussion with the regulator, the depositories have been asked to keep stock exchanges informed so that they can keep a watch on the price and volume movement of such companies. All this is part of the decision to launch 8216;active surveillance cells8221; at both depositories following the demat scam, which is still in the process of being implemented. Ironically, nearly six months after Sebi inspections revealed that some investors have been dematerialising and rematerialising the same set of shares several times over, and paying up the costs involved in the process, the regulator is yet to get to the bottom of this issue too.
Delayed merger
Meanwhile, the rumbling and discord over the grand alliance between PricewaterhouseCoopers PwC and RSMama RSM has led to a postponement of the effective merger date to April 15. Both sides continue to work furiously to salvage the deal. We learn that Ketan Dalal of RSMama has been invited to the Partnership Oversight Board and there is also talk of PWC guaranteeing the income of RSM for three years 8212; obviously this is not well received by PwC people. Moreover, Deepak Kapoor did not get the requisite consensus to be appointed managing director at Friday8217;s board meeting chaired by Rathin Datta at Kolkata. The election of partners scheduled for April 27 is now likely to be hotly contested. If all this were not bad enough, the Institute of Chartered Accountants of India ICAI 8212; a sleepy club when it comes to disciplining its members 8212; has finally turned hyperactive in the Global Trust Bank now merged case. It has apparently hit PwC with show cause notices running into hundreds of pages seeking the names of partners responsible for the bank audit.
