Search the Internet          Tips  Sites: Finance, Investment

Sebi finds nailing FIIs a tough proposition

BS Markets Bureau

The Securities and Exchange Board of India treads carefully when it comes to taking action against foreign institutional investors.

The list of FIIs currently being probed by Sebi reads like a virtual who's who. "Though we know that many of them have been colluding with Indian brokerages in manipulating prices, we cannot do anything with them unless we have exact details of how the transactions were conducted," said a Sebi source.

So far, only Credit Suisse First Boston has been actually indicted by Sebi and according to sources this happened only because the FII happened to be associated with Ketan Parekh.

Other FIIs have been colluding with other large brokers. "It is easier to nail an Indian broker on prima facie evidence rather than an FII," the sources pointed out.

The markets watchdog checks and double checks when it finds that FIIs may have been involved in irregularities.

So, though there is ample evidence to point to substantial FII involvement in the March market manipulation, Sebi is unwilling to take steps against them unless it has absolute and irrefutable proof of their hand in the price manipulation.

Interestingly, FIIs are often let off for violations in other cases too, usually for lack of sufficient evidence though a similar violation by an Indian entity would have invited action.

Sources attributed this discrimination to the clout wielded by FIIs in the market place and their ability to move the market with their transactions.

FIIs also tend to act in tandem so that a selling action by one will be imitated by the rest leading to a one-way movement in the market.

Powered by

YOU MAY ALSO WANT TO READ:
The Capital Markets Crisis
The Rediff-Business Standard Special
The Budget 2001-2002 Special
Money
Business News

Tell us what you think of this report