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SEBI wakes up reluctantly and decides to investigate a pump and dump IPO Vaswani and Book Manager Ashika

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SEBI has been strangely and inexplicably absent from its role of supervising the primary market in India despite a stream of pump and dump IPO by small disreputable promoters and investment bankers.Most of these IPOs have no fundamentals to justify lofty valuations and without the role of market operators and investment bankers have no hope in hell of getting subscribed.Its a scary gambling scheme in which retail investors put money only with the hope of getting out on the first day with probably listing gains.There is no way that an investor can make money in these issues in the long term.However the shenanigans of the promoters and bankers have gone unpunished leading to more and more of these junk IPOs getting into the stock market everyday.This only brings a bad name to Indian stock markets where manipulation can happen so brazenly and openly and pushes away genuine investors away from equities.SEBI has been recently been trying to get more retail investors into the stock market however it seems mere words as it does not take action on open corruption.

India’s Stock Market remains a heaven for Pump and Dump Operators of IPOs.Despite some high quality IPOs in recent times like Coal India,the majority of the IPOs being done are by fly by night operators and promoters.Their is little justification for the valuation and the subscription numbers.But it is a lucrative trade for shady operators who easily manage to manipulate small cap IPOs leaving huge losses for retail investors.The stock market regulator SEBI strangely remains asleep at the wheel despite some blatant pump and dump issues.More than 50% of the IPOs in the Indian stock market over the past year are  below their issue prices.But there has been no investigation and prosecution over these white collar crimes just seem gentle scolding.Like the totally infamous and ineffectual SEC of the US Stock Market,SEBI looks more and more like a toothless tiger.Despite some laudable reforms in favor of retail investors,it needs to act more quickly and reform much more.

Ashika involved in many of the Pump and Dump,Stock Scams,However no Stopping it

Note Ashika Capital has been involved in a the mid cap scam revealed by IB recently in which stock market operator Dangi and others were involved.This had led to massive losses in some of the popular mid cap stocks.Ashika was not involved in that scam but has been the lead banker in other dubious IPOs and FPOs. Tirupati Inks another junk offering where the issue price had no relation to the fundamental value of the company was book run by Ashika Capital.However despite continuous involvement in scams,Ashika keeps turning in new ones without SEBI doing anything much.

Vaswani Scam taken to another Low Level

Vaswani Industries is another one of those IPOs which happened in the market getting subscribed by 4 times.But the manipulation by the promoter and the banker Ashika Capital was taken to another low level.A large number of subscriptions were cancelled such that investors who had applied seeing 4 times would get many more shares than these had initially calculated.Note many retail investors put money into IPOs seeing the oversubscription numbers and by evidently manipulating this they had duped the retail investors.SEBI has decided to investigate this.Expect nothing much to come out of this except a small fine which would be laughably small and would lead to more such scams in the future.

SEBI to probe alleged irregularities in Vaswani IPO

Market regulator SEBI today said it will probe alleged irregularities in subscription of shares of sponge iron producer Vaswani Industries and investigation will be completed within 30 days.

The company, its promoters, directors and intermediaries have been asked by the Securities and Exchange Board of India (SEBI) to cooperate in the investigations.

SEBI, on May 13, had withheld the listing of the company’s IPO following complaints by about 100 investors alleging large scale withdrawal and rejections in the issue.

“A detailed investigations shall be initiated into the matter…The investigation shall be expeditiously completed within a period of 30 days, so that a decision on the listing application by the stock exchanges can be taken within the statuary time limit provided under the Companies Act,” SEBI said in an order.


Abhishek Shah

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