12937 - SEBI's clean chit to largest Aadhaar enrolment agency Vakrangee raises eyebrows - India Today

SEBI's clean chit to largest Aadhaar enrolment agency Vakrangee raises eyebrows

• Virendrasingh Ghunawat
• Mumbai
• February 9, 2018
• UPDATED 18:06 IST
• Follow @vsghunawat
  
• HIGHLIGHTS

• Founded on May 29, 1990, Vakrangee was named as one of Asia's 200 'Best Under a Billion' company
• Since past eight days, the stock price of Vakrangee has crashed by almost 60 per cent
• Reports of SEBI investigation against Vakrangee and Aadhaar data leak have hit the company's market value
• Allegations of price manipulation have surfaced against Vakrangee

Reuters

Dalal Street

This is an interesting story of a listed company in stock market, which was once a penny stock of 50 paise in 2009 and went straight into the Forbes list in six years.

Forbes had named Vakrangee Ltd among Asia's 200 'Best Under a Billion' companies for 2015 with market capitalisation of USD 821 million. Till January 25, 2018, with the stock price of Rs 505 per share, Vakrangee Ltd was nearly a Rs 40,000 crore company by market value.

Founded on May 29, 1990, Vakrangee is a technology-driven company and a major player in providing e-governance services such as Aadhaar biometric cards, passport and railway tickets across India.

THE FALL

Over the past eight days, the stock price of Vakrangee Ltd has crashed by almost 60 per cent and is locked in a 10 per cent lower circuit at Rs 192 per share. Due to heavy selling of shares, more than Rs 27,000 crore (market cap) of investor's money in Vakrangee stocks has been wiped out.

Vakranjee's stock price rose exponentially on January 25, 2018 only to crash later.

WHAT WENT WRONG?

Vakrangee's management in an official statement said that due to baseless news reports on Securities and Exchange Board of India (SEBI) investigation against Vakrangee for alleged rigging and manipulation of the company's share prices the share price fell.

Market analysts, however, believe there is more to the story. Many felt that the "news report of Aadhaar card's data leakage" also affected the company's value as it is the largest enrollment agency for UIDAI.

As Vakrangee's stocks plummet, high net worth individuals (HNIs) and investors have become vigilant. Some of them have started hiring "smart brains" on Dalal Street to conduct an internal investigation into the dealings in Vakrangee Ltd.

One senior stock broker told Indiatoday.in: I have got an assignment from a leading investor who has invested around Rs 200-250 crore in Vakrangee Ltd. This investor is worried if the company is bonafide, and if his investment is safe.

A market analyst said: How the company makes money, God only knows. It is a case where promoter himself gives money to people to purchase shares of his own company. Perception of Vakrangee is bad in the market, but surprisingly, the stock prices are going up without any fundamentals and big names are seen in its shareholding list.

WHAT DID SEBI DO?

According to National Stock Exchange (NSE), it had submitted three analysis reports (kind of complaint) to market regulator SEBI pertaining to insider trading and price and volume manipulation in November 2009, May 2012 and July 2016.

The third analysis report filed by NSE (the copy is with Indiatoday.in) before SEBI highlighted that during period January 2016 to June 30, 2016, a group of 22 clients related to each other as well as to the company was seen continuously buying and selling, together accounting significantly to the market gross.

"On a daily basis, the group accounted for as high as 74.87 per cent to market gross on certain days", the report said.

"The average quantity traded per day by this group of clients during the period July 1, 2015 to December 31, 2015 was 4.25 lakh shares buy and 5.19 lakh shares sell which increased significantly by almost 70 per cent to 8.05 lakh shares buy and 8.16 lakh shares sell during January 2016 to June 30, 2016," the NSE report informed. Of the 22 clients, 18 had more than 90 per cent trading activity in this scrip only.

SEBI began its preliminary enquiry. The Integrated Surveillance Department (ISD) of SEBI observed that large group of connected entities hasbeen contributing significantly to the gross traded volume, with significant percentage of trade happening among themselves and several of them having 100 per cent concentration in Vakrangee scrip only. ISD expanded the list of connected clients from 22 to 119 clients based on the available information.

After finding suspicious trading, ISD forwarded the matter to Investigation Department (IVD) of SEBI to ascertain whether there was any violation of the provisions of SEBI Act, 1992 and SEBI Regulations, 2003 in the trading by 119 suspected entities in the scrip of Vakrangee Ltd during the investigation period.

In a confidential report (the copy is with Indiatoday.in), SEBI highlighted its findings before giving a clean chit to Vakrangee Ltd. These findings were:

• Total synchronised trades by the suspected entities on BSE and NSE was 12.34 per cent and 1.97 per cent of total market volume of the respective exchange during the investigation period. Thus, the percentage of synchronised trades to total market volume by suspected entities in BSE and NSE is insignificant.
• On circular/reversal of trade issue, no specific trading pattern such as circular of trades/reversal of trades was observed during investigation period.
• LTP contribution by suspected entities on BSE/NSE is not substantial.
• No major off market transfers have been observed during the investigation period.
• No adverse inference is drawn from the analysis of trading of suspected entities.
• Based on findings of the investigation, it is recommended that we may not pursue the matter any further.

Queries sent to SEBI officials by Indiatoday.in remain unanswered.

SEBI CLEAN CHIT RAISES EYEBROWS

While talking to Indiatoday.in, market analysts on Dalal Street suspect foul play. Some contrasted Vakrangee's case with earlier manipulators in the stock market and how SEBI dealt with them.

In March 2009, SEBI examined the trading data of the Futures and Options (F&O) segment in the NSE for January to March 2007. It was observed that some stock brokers were buying and selling almost equal quantities of contracts within the day and such buy/sell was synchronised in nature.

"The time difference between the buy and sell order is only in seconds. Most of the orders were matched in a time gap of 1, 2 or 3 seconds and many orders have matched to the exact second i.e. time difference of zero. This is proof enough to establish the existence of synchronisation of trades", SEBI's order against Rakhi Trading Pvt Ltd said. SEBI is currently challenging this case in the Supreme Court.

A senior stock broker said that in the Rakhi Trading case, SEBI pointed out artificial trading, the same seems to be the case with Vakrangee but here the decision looks "managed".

A market analyst said, "It is a clear-cut case of price manipulation and rigging. Why has SEBI ignored (these) is questionable? I have heard that pressure is mounting on two independent directors (ex-LIC and ex-SEBI) to resign from Vakrangee's board before further action is taken against the company. How much of this is true, only time will tell."

Out of ten directors on Vakrangee's board, six are independent. Among them are Ramesh Joshi, former executive director of SEBI and Thangavelu Sitharthan, ex-Chief of Legal at Life Insurance Corporation (LIC).

If sources are to be believed, a fresh complaint was filed by a set of investors-cum-shareholders (including few FIIs) against Vakrangee Ltd in November 2017 with allegations of price manipulation. SEBI has started looking into the matter.

The Income Tax department is also keeping a close eye on Vakrangee Ltd. A senior I-T official told Indiatoday.in that "if the shareholding patterns of last 10 years (of the company) are examined, then one would find names of some entities who are not only holding majority of shares but also rigging the price on behalf of promoter".

The I-T official said, "If NSE's bulk deals are examined, then there are huge deals done by these entities, where shares were sold in crores of money. Where the money gone has gone, that needs to be investigated".

VAKRANGEE DENIES CHARGES

Replying to a detailed questionnaire by Indiatoday.in, the spokesperson of Vakrangee Ltd said, "We are not aware of any NSE report. We have not received any communication with respect to any complaint/investigation from the NSE and SEBI related to inside trading and price manipulation. The rumour of the company involvement in price volume manipulation is completely untrue and baseless."

Vakrangee denied allegations about role of independent directors in getting clean chit from SEBI.

The company said, "The independent director from LIC and Ex-ED of SEBI are respectable people with high integrity. Thus, these are completely untrue and baseless allegations".

Vakrangee claimed that it is a debt-free company. "At the peak, the company debt was Rs 1,142 crore i.e. short-term debt of Rs 750 crore and long-term debt of Rs 392 crore. In fact, we are in the process of getting the status of debt-free company updated with the Ministry of Corporate Affairs (MCA)," the company stated.

11880 - Brokers Forum awaits BSE direction on Aadhaar implementation - Money Control

Aug 24, 2017 07:35 PM IST | Source: PTI

Brokers Forum awaits BSE direction on Aadhaar implementation

The BSE Brokers Forum today said it will await direction from the stock exchange on mandatory implementation of Aadhaar for capital market transactions.

The BSE Brokers Forum today said it will await direction from the stock exchange on mandatory implementation of Aadhaar for capital market transactions.

The reaction comes following the Supreme Court's landmark ruling today that privacy is a fundamental right under the Constitution.

The ruling was given on a batch of petitions challenging the Centre's move to make Aadhaar mandatory for availing the benefits of various social welfare schemes. The petitions also argued that Aadhaar, when used by commercial organisations, is a breach of privacy.

"In 2004, when PAN card was made mandatory for every transaction, we, as brokers, had to comply with it and the same applied when Aadhaar was linked to avoid violation of regulatory norms. Following today's judgement on right to privacy, we await direction from the exchange and till then, we will have to comply with it," BSE Brokers Forum spokesperson Kamlesh Shroff said in a statement.

11830 - DNA Edit | ‘Stock-taking’ Aadhaar: Linkage to bourses will weed out illicit money - DNA

DNA Edit | ‘Stock-taking’ Aadhaar: Linkage to bourses will weed out illicit money

Updated: Tue, 22 Aug 2017-08:00am IST, DNA

From the very beginning, the Narendra Modi government hit the pedal to the floor when it came to establishing new and untouched heights of financial transparency and accountability. Be it the unwavering and unflagging commitment of the government to root out black money or the effort to provide banking to all by linking these services to Aadhaar, the BJP government has left no stone unturned in ensuring that the twin evils of corruption and pilferage of government funds are stopped dead in its tracks.

Another initiative under this wide banner comes in the form of the recent directive by the Securities and Exchange Board of India (SEBI). The stock exchanges have been asked to apprise the market regulator on the preparedness of the brokers to have their client submit their Aadhaar IDs before December 31. This move was inevitable in the scheme of things. Once the bank accounts of citizens are linked to Aadhaar, asking them to link their demat accounts naturally follows.

What’s more, citizens who have been conducting transactions in the market with utmost probity and above-board business practices have nothing to fear. Once implemented, the links with Aadhaar will help smoke out brokers and clients who channel illegitimately-earned money into the markets — either to make a killing on the back of inside information or to transfer the wealth to shell companies and consequently avoid tax liabilities. 

Obviously, change is painful. There already are murmurs from the brokers’ domain complaining that many customers won’t be willing to come on board or won’t proactively submit their Aadhaar cards. This is bunkum. 

The retail investor is more than keen to secure his investments, and if it involves submitting an Aadhaar ID, it is little sweat off his brow to submit the same.

The real reason many brokers are bemoaning this initiative is because it adds to their cost burden. Irrespective of how inconvenient the exercise may be, it is essential to weed out the few who use the markets for their nefarious ends. With the Aadhaar matrix in place, an intelligent framework will be standing on its feet that will help link shady investments and transactions back to the market participant. Essentially, even the PAN is supposed to serve the same purpose, but it has been vitiated given that myriads of fake PANs and counterfeit demat accounts are the norm in the market. Once this additional parameter of linking Aadhaar accounts with PAN and bank accounts take off, a prodigious chunk of the underhand dealing will be quelled.

11821 - Aadhaar mandatory for stock markets: Brokers ask for more time - Business Standard

Aadhaar mandatory for stock markets: Brokers ask for more time

Small-sized brokers also fear cost escalation in meeting the new diktat

BS Reporter |  Mumbai 

August 21, 2017 Last Updated at 11:35 IST

Stock exchanges have asked brokers to furnish Aadhaar details for all their existing clients before the end of this year. Brokers fear they won't be able to meet the deadline and have asked for more time for compliance. 

"The December deadline will be slightly cumbersome in terms of achieving 100 per cent compliance. We have told stock exchanges to give us a year to complete the full database," said CJ George, MD, Geojit Financial Services. 

"There are legacy clients. There are a lot of investors who are not active now but were active in the past. We have asked for time for such accounts. Even if we give notice, they won't respond," he added. 

In a notice last week, stock exchanges directed brokers to cease the accounts of clients who fail to submit Aadhaar details by December 31, 2017. Clients who have opened trading accounts after June 1, 2017, have been given six months to submit details. 

ALSO READ: PML rules: BSE asks members for status report on clients' Aadhaar details

"In the case of failure to submit the documents within the aforesaid time limit, the account shall cease to be operational till the time Aadhaar number is submitted by the client," BSE said in a notice dated August 17. 

"One way is to freeze the account, which will make the investors unhappy. We are facing a difficult proposition of making the clients happy and at the same time ensuring compliance," said George. 

Small-sized brokers also fear cost escalation in meeting the new diktat. 

"It entails an additional cost on us. We have no choice than to comply but it's an irritant, both on part of brokers and clients. There are already certain requisites for share trading pertaining to PAN numbers, KYC, and so on. So, when linking of PAN with Aadhaar has been made mandatory, why again does Aadhaar need to be linked with the Demat. It's nothing but a duplication of work. Besides, it should have been done prospectively not retrospectively," said Alok Churiwala, managing director, Churiwala Securities.

Industry players say there are some clients who use multiple PAN card numbers for trading. Making Aadhaar compulsory will help weed out such investors and curb manipulation. 

"By making Aadhaar mandatory, the verification of clients' accounts would get easier. It will certainly curb stock market manipulation, which has been increasing. However, this is just an extension of current anti-money laundering law... Every new trading member/client has to comply with the PML (Prevention of Money Laundering) rules effective June 1," said Mehul Patel, member, BSE Brokers Forum. 

11817 - Sebi sets ball rolling for making Aadhar compulsory for stock trades - Economic Times

Sebi sets ball rolling for making Aadhar compulsory for stock trades

BY NISHANTH VASUDEVAN, ET BUREAU | 

MUMBAI: Securities and Exchange Board of India has set the ball rolling for making Aadhar compulsory for stock trading. The capital market regulator has asked exchanges for their feedback on brokers’ preparedness to get their clients to submit Aadhar carddetails before December 31. 

ET had first reported on August 10 that Aadhaar would become mandatory for buying shares and mutual funds. 

BSE, in a recent circular, asked brokers for their comments on the matter by August 23. The exchange said existing clients will have to submit the Aadhar card numbers to their brokers by December 31. New clients should submit the details within six months of starting the demat account. 

“In case of failure to submit the documents within the aforesaid time limit, the account shall cease to be operational till the time Aadhaar number is submitted by the client,” the circular said.

The government and Sebi are making Aadhar compulsory as part of its Prevention of Money Laundering (PML) rules, which aims to curb illegitimate money. The capital markets regulator, in recent years, has cracked down on individuals and entities for using the stock exchange platform to convert illegal money into legal money.

11782 - Aadhaar Could Be Used to Stop Stock Market Money Laundering - Find Biometrics

Aadhaar Could Be Used to Stop Stock Market Money Laundering

Posted on August 14, 2017

Government authorities in India are preparing to link Aadhaar, the country’s national biometric ID program, to stock market investments, according to new reports.

It’s another facet of the central government’s attempt to use Aadhaar to curb fraud, with the idea in this case being that Aadhaar authentication for investors could help to prevent money laundering through the stock market; officials are concerned that some investors are using such investments to hide illicitly obtained capital and to evade taxes. As The Economic Times reports, officials with the Securities and Exchange Board of India have held informal meetings with “select market intermediaries” to consult about the idea.

The effort comes soon after India’s Supreme Court upheld the government’s right to link Aadhaar to citizens’ Permanent Account Numbers, effectively allowing for Aadhaar authentication for tax filings. (Though the small minority of Indian citizens who have not yet registered for Aadhaar are exempted.) And it comes ahead of a pending ruling from the Supreme Court on the essential constitutionality of Aadhaar, with the court having hinted that its ruling will not consider Aadhaar in violation of citizens’ privacy rights, a decision that could safeguard Aadhaar’s continuing expansion.

It isn’t yet clear when the stock market implementation would come into effect, and the central government has not yet made any official announcements concerning the plan.

Sources: The Economic Times, Deccan Chronicle

11751 - Aadhaar may become the gatekeeper to Dalal Street soon - Economic Times

Aadhaar may become the gatekeeper to Dalal Street soon

By Nishanth Vasudevan, ET Bureau|

MUMBAI: Aadhaar may soon become mandatory for buying shares and mutual funds. The government and the Securities and Exchange Board of India (Sebi) are planning to link Aadhaar to financial market transactions to try and curb sharp practices such as conversion of black money into white through the stock market. 

Two people familiar with the development said the government has realised that  .. 

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