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BSE unearths bogus deals in select B2 scrips

Sangita Shah

The Bombay Stock Exchange (BSE) has come across large number of bogus deals in certain stocks, which are executed in the normal course of trading to create a false market.

Though the specific details could not be obtained, the stocks mainly belong to the B2 group, especially those which are largely illiquid. It is feared that with the expansion of the Bombay Stock Exchange Online Trading (BOLT) system to several centres outside Bombay, occurrences of such instances are likely to increase.

Recently, Cyberspace Info, formerly known as Century Finance International, was traced to be allegedly indulging in such practices. Sebi is currently investigating the matter.

According to sources, unknown clients place orders with members for purchase of fairly large quantities of certain B2 group scrips. These orders are executed by the members in the normal course on BOLT but the clients purchasing these shares are not traceable. The members have to honour their purchase obligations and take delivery of largely illiquid B2 group scrips.

It is suspected that the clients placing the buy orders in the B2 group scrips are in collusion with the selling clients, the exchange said. The selling clients are collecting the sale proceeds in respect of the B2 group scrips from the selling members and the buying members are stuck with these scrips with buying clients could not be traceable.

BSE is taking steps to ensure prevention of such deals and has asked its members to impress upon their local as well as up-country sub-brokers to verify the financial status, bonafides etc of all their clients before executing trades on their behalf. The BSE brokers are also asked to tighten off-line surveillance of sub-brokers.

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