Insider Trading in India – Regulator fines Ranbaxy,J P Associates Executives – Flash in the Pan or New Policy

Insider Trading in the Indian Stock Markets is quite rampant with promoters of business groups known to indulge in this white collar crime. However it continues to flourish as the market regulator SEBI has not done much about it. Note Insider Trading is very difficult to prove , though the recent conviction and jailing of hedge fund manager in the US Raja Rajratnam and some of his associates shows it can be done if the regulators and enforcers are proactive. India seriously lags behind in cracking down on Insider Trading though in the recent past SEBI has woken up from its stupor.

Note blatant pump and dump IPO’s have made the Indian market a heaven for stock market operators. Despite this going on for years,only recently SEBI has taken some steps against the manipulation of the primary market. Now SEBI has taken some steps in the Insider Trading case as well by fining executives of JP Associates and Ranbaxy both of which are constituents of the Indian main stock market index. However a mere fine will not do to deter insider traders. A big jail term for a insider trader will make white collar criminals think more in indulging in criminal activity rather than small fines .

SKS Microfinance Scandal

Indian Stock Markets are a very dangerous place to invest with circular trading,fleecing of retail investors by  management,pump and dump schemes in IPOs as common as a bid ask spread.The stock market regulator SEBI is mostly toothless failing to act against known stock manipulators known as “market operators” who act with impunity.The latest malfeasance has hit the stock of SKS Microfinance which was one of the most hyped IPOs last year with fabolous growth and profit figures and a high valuation.However the stock has seen its fortunes go down with the AndhraPradesh government launching a crackdown against the Microfinance Companies.This was done after the usurious interest rates and bad practises leading to suicides amongst borrowers.The stock has already touched new lows before it fell another 20% circuit down filter on April 6 2011.

Note the stock fell before it announced the results after the close of the markets which means that insider trading had take n place.The volumes at 10 times certainly seems to hint so as the JP Morgan downgrade of the stock could not have led to such a big fall in which there are a large number of foreign and domestic funds as investors.Besides its problems in AndhraPradesh are hardly new and Indian brokers hardly that good that their reports cause such big stock price movements.Like other SEBI probes expect this one to fail or result in a small penatly which will not deter more such white collar fraunds in the Indian Stock Market.Insider Trading in India is quite widespread with some of the biggest business groups having been fined by SEBI like ADAG etc.

Inflation,Interest Rates and Corruption Triple Whammy Kill Indian Stocks

India’s Stock Market has been amongst the worst performing market in the world in 2011 due to a number of converging issues.While Inflation and Interest Rate Increases are common themes hitting emerging market stocks,corporate governance problems are providing the icing on the cake for bears.Yesterday,stocks of the Anil Ambani Group (ADAG) fell by a bone chilling 15-20% on news that India’s accounting body ICAI has asked for accounts from 2 of the group companies Reliance Communication and Reliance Infrastructure.While no wrongdoing has been proved yet,it goes to show the low trust in company management.Note the promoters and directors of this Group had recently paid a massive amount in penalty to SEBI for insider trading charges.2 of the companies had also been barred from capital market operations.This had already had hurt the stocks and this proved to be the last straw.The Group Leadership is now blaming “Bear Cartel” for the woes which seems a bit laughable considering that they were charged with insider trading themselves.

Insider Trading has increased around the world with even stalwarts like the Swiss Central Bank Chairman and the ex-CEO of Mckinsey in the docket for insider trading charges.