India Market Regulator Suspects Credit Suisse Unit of Manipulation
Daniel Pearl, 20 April 2001
India’s stock market regulation authority ordered three brokerage groups, including Credit Suisse Group ‘s Credit Suisse First Boston unit, to freeze brokerage activities until further notice, saying they were involved in recent manipulation of share prices.
The actions, by the Securities and Exchange Board of India, marked the toughest discipline yet meted out to a foreign brokerage firm in India. Besides CSFB, the regulator handed similar notices to Indian companies, five of them associated with Nirmal Bang Group and three associated with First Global Securities.
The Securities and Exchange Board, known as SEBI, gave the companies the opportunity to contest the freeze order, but not before the end of this month, people familiar with the matter said. SEBI officials said they were acting to protect investor interests but declined to make public letters SEBI sent to the companies and to Indian stock exchanges.
K.R. Bharat, managing director of CSFB’s Indian unit, said, “We are concerned about the current developments and are contemplating our course of action,” but declined to elaborate. A First Global official confirmed getting an order barring it from trading but declined to comment. Nirmal Bang also declined comment.
SEBI for the past month has been investigating recent wild swings in the market, and filed a report this week that the Indian government hasn’t yet made public. Investigators appear to have focused on CSFB because it was identified as a heavy seller of shares on March 1, as the market began to fall. CSFB is believed to have helped sell shares owned by Ketan Parekh, an influential market player who helped push several technology and media stocks to unexpected highs before the market crash. Mr. Parekh has since been arrested on allegations of market manipulation. Nirmal Bang and First Global, meanwhile, have been cited as bears who had staked big bets on the shares’ collapse.
