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KP rigged GTB prices before UTI Bank merger: Sebi

Stockbroker Ketan Parekh, in league with Ranbaxy-promoted Vidyut Investment Ltd and Credit Suisse First Boston Securities, rigged the price of Global Trust Bank scrips ahead of GTB's proposed merger with the UTI Bank to help it get a better deal, the Securities and Exchange Board of India has noted.

In its interim report on investigation into the recent stock market scam, Sebi held Parekh-controlled trading companies -- Classic Credit Ltd and Panther Fincap & Management Services Ltd -- Vidyut Investment Ltd and CSFB guity of manipulating the price of GTB scrips through circular trading.

"The price of the scrip of GTB rose 100 per cent, between October 13 and November 21, 2000, from Rs 57 to Rs 114. The price rise did not appear to be justified on the basis of any fundamental or corporate developments," Sebi said.

The investigations also brought out that the above companies each separately violated the Sebi takeover code by acquiring more than 5 per cent shareholding limit of the GTB at a given point of time and then did not disclose to the target company about their holdings.

The Sebi report said that the price of GTB scrips were manipulated by placing purchase orders for large quantity of shares at artificially hiked prices which were much above the last traded price.

Besides, Classic Credit Ltd and Panther Fincap & Management Services also indulged in circular trading of large quantities of shares, creating artificial volumes.

"Buy and sell orders were put simultaneously or in close proximity, which were also for the same quantity and at same price thereby ensuring matching of trades."

Sebi said Ketan Parekh group used several investment companies including 20th Century Holdings Pvt Ltd and Vidyut Investments for parking of GTB shares to circumvent the takeover regulations and to corner the equities of GTB.

Besides, it also appeared from the trading pattern that Vidyut Investments indulged in unauthorised stock lending to the Ketan Parekh group entities, Sebi said.

Brenthfield Holdings Ltd and Kensington Investments Ltd aided and abetted Ketan Parekh group in manipulating the scrip of GTB and helped it in circumventing the takeover regulations, Sebi said adding CSFB indulged in circular trading on behalf of Ketan Parekh group entities.

GTB has been used by Ketan Parekh group as a hub for the transfer of funds to Calcutta-based entities.

Panther Fincap and Classic Credit have transferred more than Rs 28 billion from their accounts in GTB, Bombay, to various Calcutta-based entities, Sebi added.

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