Zee Telefilms faces SEBI probe

MUMBAI, Sept 19: Even as the merger talks between Star Television and Zee TV are currently on in London, the Securities and Exchange Boar...

MUMBAI, Sept 19: Even as the merger talks between Star Television and Zee TV are currently on in London, the Securities and Exchange Board of India (SEBI) has decided to launch an investigation into the unnatural spurt in the Zee Telefilms scrip from Rs 70 to Rs 700 within the last 12 months. Zee Telefilms is making software for various Zee channels for a fee.

The regulatory body has shot off a communication to the Bombay Stock Exchange (BSE) asking it to carry out a preliminary study into the price pattern and volume growth registered at the Zee counter. The report is expected to be submitted to the SEBI within a week.SEBI officials say that as per the preliminary information with them, there are enough reasons to show that price manipulation has taken place in the scrip.Besides, the Investors Grievances Forum has also jumped into the bandwagon by asking the regulatory bodies to probe the unnatural rise in Zee Telefilms scrip, Kirit Somaiya, president of IGF told this newspaper.

In fact, the promoters ofZee Telefilms have given a statement that it will buy 2% stake from the market to increase their stake in the company, fuelling the scrip. It, later, decided against the move saying that the scrip has shot up beyond their targeted price. The exchange has been asked specifically to probe the scrip rise in the first two weeks of September.The Zee Telefilms stock has appreciated by over 23 per cent during the past six settlements beginning August 3 to September 15 following speculative reports about an imminent merger of Zee with Star TV.

Story continues below this ad

Speculators took Zee Telefilms shares to dizzying high of Rs 700.75 on September 15 as compared to Rs 70 few months back. The recent sharp rise from Rs 450 levels to Rs 680 was also attributed to the punting activities at this counter. This also led to a phenomenal rise in its volumes by over 170 per cent, to touch a high of Rs 30 lakh shares on the same day.

BSE officials say that they will conduct their own investigation besides looking into SEBI’s query. The BSE willprobe into the actual delivery and carry-forward business conducted at the counter. On September 12, the counter had registered a carry-forward business of over 4 lakh shares.

What has caught the regulatory body’s fancy is that despite 20 lakh shares are available as floating stock, the counter has registered a phenomenal volume of over 30 lakh shares on the BSE itself on September 15.Speculators, fuelled by speculative reports in a section of media, had a free run on the Zee Telefilms counter. The current speculative excess was based on the assumption that the upward potential of the stock is somewhere around Rs 900-1150. This was reflective in the manner in which every kerb rate was routed through the official channel.