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Wednesday, Dec 04, 2002

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BSE warning on bogus deals

Our Bureau

MUMBAI, Dec. 3

THE Bombay Stock Exchange has said some unscrupulous persons are misusing the trading system by making bogus deals in illiquid shares.

According to the BSE, these persons lure BSE members to deal in certain B-2 and Z group stocks or illiquid stocks by placing buy orders. Thereafter, these persons do not make the payment for their obligations or issue dud cheques.

The persons are believed to act in concert with the selling member's clients. These clients collect the sale proceeds from the selling members of the exchange while the buying members are stuck with the illiquid stocks and have to honour their market obligations, the BSE said in a statement.

The BSE has advised its members and their sub-brokers to take adequate caution and to do due diligence before accepting any person as their client. "A sizeable business in B-2 and Z or illiquid scrips should not be done for newly registered clients unless members or sub-brokers know them very well or about the quality of the scrip," the statement added.

The exchange has advised the investing public to take note of the quality of companies especially the group in which the company is placed at the exchange before investing in any scrip. The BSE has warned that it will take appropriate action including suspension of trading in scrips if the companies are found to be involved in such activities and acting in collusion with any person to defraud investors.

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