The Securities and Exchange Board of India will probe whether a bear cartel triggered the sharp fall in the share price of electrical appliance maker Crompton Greaves by spreading rumours about the company.
The shares of Gautam Thapar-led Avantha group company had tanked 14 per cent in each of the past two trading sessions amid rumours of insider trading, but recovered some of the lost ground on Thursday.
The stock closed 2.5 per cent up at Rs.181.30 on the BSE on Thursday, after reaching a 52-week low of Rs.171 on Wednesday.
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The sharp fall on July 19-20 has come under the SEBI scanner as it coincided with wide-spread rumours of alleged violation of insider trading rules by the company's former chief Sudhir Trehan, sources said.
As neither the company nor Mr. Trehan, prime-facie appears to have violated insider trading norms, the regulator suspects the role of some bear cartel in spreading the rumours to hit the share price, the sources added.
The rumours about Mr. Trehan having sold a significant amount of shares in the market in violation of rules began soon after the company posted a sharp fall of 58 per cent in the quarterly net profit on July 19, giving rise to the suspicion of some ulterior motives by a bear cartel, the sources added.
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In a statement issued on Thursday, Crompton Greaves also clarified that Mr. Trehan demitted office on June 1 and the shares in question were bought by him 11 years ago. “... he sold them to plan for his retirement.
“Due process was followed as per SEBI and Crompton Greaves' Insider Trading Regulations, pursuant to which, Mr. Trehan sought permission to sell his shares in the open trading window, which the company secretary gave,” the company said in a statement.