• PAGE ONE
• INDEX
• HOME

SEBI report on insider trading in Hitech soon

Ashok Jainani

MUMBAI, July 1

THE Securities and Exchange Board of India (SEBI) has found instances of insider trading in its investigation into the unusual movement in share price and volumes of Hitech Drilling Services India Ltd (HDSI) during March.

SEBI has completed its investigations and is likely to submit the final report to the SEBI board shortly, senior SEBI sources said.

SEBI sources said that the markets regulator had gathered enough evidence of insider trading in HDSI shares, but declined to divulge the identity of persons and brokers who bought large quantities of shares in the run-up to the deal announced on Sunday, March 18.

SEBI has tracked trading details in HDSI shares for few months prior to the deal in mid-March. SEBI sources said that traded volumes pattern during the period of enquiry suggested that trading on the basis of privileged information might have actually be gun much earlier than the official announcement of the deal.

The volumes and share prices of HDSI started rising in the run-up to the negotiated deal with Tatas and subsequent open offer by Aban Loyd Chiles Offshore Ltd (ALCO) for HDSI shares. The HDSI counter, being in compulsory rolling settlement, generally clo cked lower trading volumes. The average daily trading volumes in HDSI during January, February 2001 were in the range of 4,500 and 7,700 respectively and the share price ranged around Rs 35.

Suddenly, the counter started attracting larger volumes and on March 2, the volumes touched 25,000 without any apparent announcement or change in company's business and despite the stock being in compulsory rolling settlement mode. The volumes started ri sing thereafter and clocked 31,743 on March 13, 34,499 on March 14 and 17,622 on March 15 before it hit over two lakh on March 16, a Friday and last day of the settlement on BSE.

With rising volumes, the price also started rising and hit the 16 per cent circuit-breaker for two consecutive days March 14 and 15. On March 16, it shot up 11 per cent to close at Rs 50.70 on the BSE.

Interestingly, the volumes and share price of Aban Loyd remained normal and did not show any unusual activity during this period.

On March 18, ALCO announced that it had decided to buy out 22.5 per cent stake held by Tata group firm, Tata Industries, in HDSI at a price of Rs 92 per share, an 81 per cent premium to the closing price on March 16. The deal with Tatas was to be followe d by an open offer by ALCO for buying the balance 77.5 per cent equity stake at the same price.