Market regulator SEBI’s surveillance system generates about 100 alerts of suspicious trading activities, of which at least 10 are pursued for further action.
To provide a broad idea about surveillance mechanism in place for the capital market, these figures were disclosed by Securities and Exchange Board of India (SEBI) Chairman U K Sinha in New Delhi on Thursday.
Talking about frauds happening in the securities market, he said that the regulator has a sophisticated surveillance mechanism in place for detecting such activities.
Similar systems are also there with stock exchanges.
“Everyday, SEBI system generates about 100 alerts. Each and every alert is tracked, it is based on certain parameters. Everyday, 8 to 10 alerts we take to the next level. Some of these (cases) leads to investigation and enforcement action,” Mr. Sinha said.
Noting that it is “very difficult to identify who the victim is” in securities market frauds, the SEBI chief said it is possible to detect such instances.
According to him, there are different kinds of frauds such as synchronised and circular tradings, price manipulation and spoofing of markets with high frequency trading.
Besides, he said there are also information-based frauds.
“For example, somebody is making false announcement. An announcement regarding large order, announcing mergers and acquisitions that are non-existent... These are examples which have to be taken with a pinch of salt,” he said.
He was speaking at a conference on ‘Capital Market Frauds and Malpractices: Genesis, Resolution and Prevention’ organised by industry body PHD Chamber in New Delhi.
Mr. Sinha also said that there have been about 40 to 41 examples where based on the media reports, either the volumes have gone up immediately or prices have moved substantially but later the information was found to be wrong.
