Gossip & Tales: A Cartel Under Sebi Scanner

Speculation is rife that Hari Tibrewala, the Dubai-based Hawala Operator whose entities were raided by the Enforcement Directorate (ED) recently, may be holding a 20 per cent stake in a Mumbai firm founded by a research analyst.

Front entities of Tibrewala that picked up a stake in all the small and mid-cap companies and even SME-listed companies are now under the scanner of market regulator Sebi after the ED raids. Zenith Multi Trading DMCC and Tano Investment Opportunities funds are two such entities that Sebi is looking into. 

Interestingly, it has come to light that in most companies, where Tibrewala front entities held a stake, and his research firm also had shareholding and he promoted these companies as part of his firm's activities. Getting preferential allotment of shares from friendly promoters of small and mid-cap companies on the main board of stock exchanges. Some of these companies being promoted had questionable fundamentals.

The Mumbai research firm of the financial analyst, currently under the probe, had caused a flutter when it started promoting a meat packaging company. Due to the nature of its business, most Indian brokerages had shunned this company. Preferential allotments in this steel and power company have come under the scanner. The financial analyst is now said to be ensconced in Dubai. ED Raids on Tibrewala suddenly led the cookies to crumble.  

The Thin Red Line
They funnel money into the structures formed by some personalities and use them to market the companies they have invested in. Sources say, in the coming days Sebi is likely to reveal more about this nexus.

Hence, there is little wonder when the Sebi chief Madhabi Puri Buch said that the regulator was building a robust case before taking action and that it has received strong indications of manipulation. "We are working to evidence the signs (of price manipulation), both at the IPO level and at the trading level," Madhabi Puri Buch said on Monday. "We have the technology to do it and therefore we can see the patterns (of fraudulent activity) and, fortunately, the market has also given us feedback and advice on how to identify such instances and how to deal with them."

Palak Shah

BW Reporters The writer is author of the book: The Market Mafia - Chronicle of India’s High-Tech Stock Market Scandal & The Cabal That Went Scot-Free. Palak has been a journalist in Mumbai for nearly two decades now. He has worked for most premier pink papers including The Economic Times, Business Standard and The Financial Express and The Hindu Business Line. He was drawn to crime reporting at the age of 19 but a few years in the field told him that the fabric of crime had changed and the organised gangs, as Mumbai had witnessed during the eighties, no longer existed. It was business and markets that dominated the scenario. His passion to unravel the intricacies of the ‘white money’ economy led Palak to the world of finance and regulations.