The market watchdog Sebi and stock the exchanges banned leading gems and jewellery brand Gitanjali Gems promoter Mehul Choksi and 25 other firms linked to Prime Broking, as part of their probe into suspected market manipulations. The decision has been taken pursuant to an investigation carried out by Sebi and NSE into the trading activity of brokerage firm Prime Broking Company and trading in Gitanjali Gems by these entities.
While the investigations are continuing, the stock exchanges, including NSE, BSE and MCX-SX, decided to suspend the 'Unique Client Codes' of the 26 entities from trading for a period of six months, or till the conclusion of the probe, whichever is earlier, they said in similar circulars. All these 26 entities are suspected to be linked to Prime Broking, which itself happens to be a significant shareholder in Gitanjali Gems, where managing director Mehul Choksi is the main promoter with 51 percent stake.
Gitanjali stock has fallen sharply in the past one week from about Rs 150 to close to Rs 115, while the shares were trading much higher at about Rs 550 level a month ago. According to sources, some more brokerage firms and their clients are currently being probed and they could also face similar actions. Sources said these entities were indulging in manipulative trades in the market and could also have been trading through separate client codes — other than their allotted unique client codes — to conceal their overall positions and margins. All the traders and brokers need individual UCCs to carry out trades either for themselves, or for their clients. The entities under probe are suspected to have been conducting trades through benami entities.
The suspension orders have come at a time when some brokers and their clients are already being probed for unauthorised trades in the currency derivatives market. The entities which have been suspended from trading with effect from today include Mehul Choksi, Manoj Madhav Vankar, Prime Securities, Prime Research and Advisory, Pinky Agro Foods, Primesec Investments, Sancheti Properties, Sharddha Garmewnts, Trusha Infra, Vankars Gems & Jewelleries. Prime Securities is also a listed company and Prime Broking is a shareholder in it.
