Few industrial groups in the country have gained a record of being investor friendly. But there is no comparison when Essar comes through. The only reward they have given investors is by buy-back and/or de-listing companies. Take a look-Essar Steel used to quote at Rs 350 in 1994. By the time they delisted the stock had fallen to double digits. Attempts have been made to delist Essar Securities, Essar Ports, Essar Shipping and now Essar Oil.
The unique part of this deal seems to be that the tranasaction was known to influential people. So while Essar Oil was raising a smoke screen trying to delist at Rs 108, the people in the know were mopping the stock. The price move tells all. From Rs 105 on 5th June 2015, the stock hit a high of Rs 198 on 9th July 2015-near doubling in the market cap of a Rs 35000 crore entity.
The regulators have been extra cautious about promoters trying to cover dubious deals through mergers, acquisitions, buy-backs and asset sales. Some pass muster but many collapse under the watchful eye of the Regulator. In the present case all trades in the past month need to be evaluated. There will be atleast 30-50 stock brokers being used across the nation who would used thousands of client accounts to do carry out circular trades in the Essar Oil counter.
Most of these trades would have been squared within the month. It is the last few ones that got concluded today which might be the end of the tail. If Sebi can catch these guys-the nexus of promoters, insiders and brokers can be broken. More importantly, Sebi will have an important insight on how the criminal minds work in the country and what can be done to nullify them.
Punishments must range from criminal to life bans, as also disgorgement of all profits. White Collar crime is being committed in a farcical manner-it is a game being played in the shadows.
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