MUMBAI, February 13: The Bombay Stock Exchange (BSE) authorities have warned erring members to refrain from placing orders at unreasonable prices in the case of scrips trading below par value following the removal of circuit breaker on such shares.The members have been advised through a circular that the exchange would not only initiate disciplinary action against the members who create artificial price or manipulate prices in the scrips, but also levy financial penalties and impound the unreasonable gains which they make.
It may be recalled that the BSE had decided not to apply circuit filter limit to scrips which are quoted below the par value with effect from Monday. Following this, several brokers have started placing transactions mainly to jack the price of low priced scrips. Some of the dud shares which flared up included Kadvani Securities, Mahadev Corporation and Vishal Agri. On Wednesday, the shares of Kadvani Securities was traded at Rs 25 against its 52-week high of only Rs 2.50 and low of Rs2. In the case of Vishal Agri the price was Rs 12.40 against its previous quoted rate of only Rs 1.90. In both cases, only one transaction was done. Mahadev Corporation traded at Rs 7.90 against the previous level of 40 paise.
The circular pointed out that some members have done trades in a few scrips quoting below Rs 10 at unrealistic prices either mistakenly or with an intention of making undue profit either within the settlement or subsequently in the auction to be conducted. Despite BSE warning members about punitive action, artificial prices were noticed on Thursday and Friday also.
"Most of these orders are placed by the clients and we have no control on prices quoted. Since the exchange has relaxed circuit filter limit it is left to the client to take such risk," brokers said. They also complained that when such scrips moved below unrealistic level, the exchange authorities rarely came out with any action.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
