SEBI officials may be questioned on 'leaked' report

Central security agencies are likely to question some officials of market regulator Securities and Exchange Board of India (SEBI) and a few stock market operators on the leakage of a classified report purportedly prepared by the intelligence bureau, which led to fall in share prices of many small and mid-cap companies.

As part of the probe, which has been ordered by the Union home ministry, the market operators and SEBI officials may be questioned by the agencies to know whether some players tried to take advantage of the alleged leak, indulged in any unfair trade practices and rigged the stock market.

The probe is aimed at unearthing the motive behind the circulation of the purported report, the people responsible for the alleged leak and whether any group with vested interest had tried to manipulate the market, official sources said.

The investigators are also looking into the possible role played by any government official in the circulation of the purported report.

The share prices of many small and mid-cap companies had crashed last week in anticipation of a crackdown by regulators on stock market operators named in the purported intelligence bureau report.

The report has been in circulation for nearly a week. Stocks in the Bombay Stock Exchange (BSE) small-cap index that fell over 45 per cent during the period include those of Parekh Aluminex, Midfield Industries and Comfort Intech.

In the BSE mid-cap index, stocks of Ruchi Soya, K S Oil and Shree Ashtavinayak fell around 26%. During the period, the BSE small-cap index fell 7.5% while the BSE mid-cap index lost 4.8%.

The report, said to be prepared by outgoing intelligence bureau chief Rajiv Mathur, apparently named stock market operators like Ketan Parekh, Vimal Rathod, Sanjay Dangi, Raju Barter, Ashok Poddar, Manish Marwah, Dinesh Singhania, Raj Agarwal and C Sivasankaran.

Earlier this month, market regulator SEBI had unearthed a nexus between some mid-cap companies and market operators who are alleged to have rigged the share prices of Welspun Corp, Murli Industries and Ackruti City, ahead of their respective convertible bond issues and private placement institutional investors.