At least 70 entities including foreign brokerage firms, FIIs and others are under scanner for suspected insider trading activities and circulation of ‘unpublished price sensitive information’ for fraudulent and unfair trade practices.
The probe against these entities follows unearthing of a major insider trading case in shares of l&T Finance, in which capital markets regulator Sebi last night barred a Cayman Islands-based hedge fund, Factorial Master Fund, from Indian securities markets.
This fund, manged by Hong Kong based Factorial Capital Management, traded in derivative contracts of l&T Finance with Offshore Derivative Contracts (commonly known as P-Notes) through five different Foreign Institutional Investors in an “aberrant and suspicious” manner.
These five FIIs were Macquarie Bank, Goldman Sachs Singapore, Merrill lynch CM Espana, Nomura Singapore and Citigroup Global Markets Mauritius ltd.
A probe by the capital markets regulator found that Factorial was involved as potential investor in the market gauging exercise undertaken by Credit Suisse as ‘Seller Broker’ of l&T Finance for its Offer for Sale (OFS) in March.
While Sebi has passed an interim order barring Factorial from Indian markets, a further probe is underway against other entities and to find out those involved in flow of ‘insider information’ about shares sale price of l&T Finance.
When contacted Credit Suisse spokesperson declined to comment, while a Factorial spokesperson said that allegations were “without merit” and a thorough probe will absolve it.As per the Sebi order investment banking team of Credit Suisse had contacted Factorial in relation to the OFS of l&T Finance.