KPMG, Deloitte empanelled to conduct forensic audits of listed firms

Capital markets regulator the Securities and Exchange Board of India (Sebi) has empanelled nine entities, including KPMG, Grant Thornton and EY, for conducting forensic audits of financial statements of listed companies to check frauds.

The other firms that have been selected are Deloitte Touche Tohmatsu India LLP, Chokshi & Chokshi LLP, G D Apte & Co CA, JLN US & Co, Pipara & Co LLP and T R Chadha & Co LLP.

Pursuant to completion of the empanelment process, these accounting firms have been empanelled to take up the assignments relating to forensic audit, the Securities and Exchange Board of India (Sebi) said in a notice issued on Thursday.

Earlier in July, the markets watchdog had invited applications from eligible CA firms “for empanelment to take up assignments relating to a forensic audit of financial statements of listed companies”.

The move comes amid Sebi ordering a forensic audit of a slew of companies including Fortis Healthcare.

Of late, there have been concerns voiced over certain auditors for being negligent while examining books of the listed firms with various inconsistencies in financial statements being ignored.

Business Standard

Sebi issues show-cause notices to 300 brokerages in NSEL case

The Securities and Exchange Board of India (Sebi) has issued a show-cause notice to 300 brokerages whose clients lost significant money in the infamous Rs 56-billion National Spot Exchange (NSEL) scam.

Sebi’s notice alleged that these brokerages no longer meet the “fit and proper person” criteria and hence should not be allowed to continue as intermediaries.

The regulator asked these brokerages to explain why the action recommended should not be taken against them under the prescribed provisions of Sebi (intermediaries) and Sebi (stock-brokers and sub-brokers) regulations.

Sebi’s fit and proper criteria define basic conditions that intermediaries need to fulfil in order to perform their duties and responsibilities. Among key conditions are integrity, absence of any conviction and not being a willful defaulter.

The regulator said that it has initiated adjudication proceeding and appointed designated authority on September 21 to inquire into the alleged violation of the fit and proper norms.

Business Standard

YES Bank hits new high; rallies 15% in 9-days on SEBI nod to launch MF biz

Shares of YES Bank hit a new high of Rs 386 per share, rising 2% on the BSE, and moving higher for the ninth straight trading session after the bank said that it has received approval from capital markets regulator SEBI to start mutual fund business. The stock surpassed its previous high of Rs 385 recorded on July 12, 2018 in intra-day trade.
“This approval is subsequent to the Reserve Bank of India’s (RBI) approval granted to Yes Bank to sponsor a mutual fund followed by SEBI’s in-principle approval received subsequently,” the bank said in a statement on July 4, 2018.

In past nine trading sessions, YES Bank has rallied 15% as compared to 2% rise in the S&P BSE Sensex.

Meanwhile, Motilal Oswal Securities expect YES Bank’s loan growth to be significantly ahead of the system at 57% YoY on the back of refinancing opportunities and strong growth in retail banking.

Mid-year market review: Midcap index dips 13%, smallcap down 16%

Additional surveillance mechanism for select stocks put in place by market regulator Securities and Exchange Board of India (Sebi) and concerns regarding rejig in classification of mid-and small-caps have led to stocks from these two segments underperform their large-cap peers in the first half of calendar year 2018 (H1CY18).

The S&P BSE Midcap and S&P BSE small-cap indices have lost around 13 per cent and 16 per cent respectively in H1CY18, as compared to four per cent rise in the S&P BSE Sensex during this period, ACE Equity data shows.

Indiabulls Ventures, Firstsource Solutions, NIIT Technologies, V-Mart Retail and MindTree gained 61 per cent to 84 per cent and were the top performers among the BSE 500 pack. On the other hand, Vakrangee, Kwality, HCC, HDIL and Manpasand Beverages lost in the range of 65 per cent to 85 per cent in H1CY18, ACE Equity data shows.

For the remaining half of CY18, analysts expect the market to remain choppy on account of rising oil prices that could stoke inflationary pressures, possible hike in interest rates by the Reserve Bank of India (RBI), corporate earnings, rupee levels, political uncertainty surrounding the assembly elections scheduled for H2CY18 and the general elections scheduled for 2019. 

Doing whatever is necessary to safeguard investor interests: Ajay Tyagi

AJAY TYAGI, chairman of the Securities and Exchange Board of India (Sebi), spoke on various issues while addressing the media following the board meeting. Edited excerpts: Additional surveillance measures (ASMs) The ASMs are for protection of investors.

Some of them have to come suddenly to contain volatility in the stock Alleged leak of stocks in the ASM list We are conducting our own enquiry and stock exchanges are conducting a probe on their end. We have taken some decision on the collective action. If anyone is found guilty, we will take stern ...Read Full Story

Top brokerages continue to dominate: Largest 25 contribute 54% of volumes

Large entities are increasingly dominating the domestic broking scene. The data shows that the top 25 brokers now account for 54 per cent of trading volume, from 41 per cent only five years earlier. The share of the top 10 brokerages rose from 24 per cent in 2013-14 to 32 per cent in 2017-18.

The number assumes significance, as there are a little over 2,500 brokerages registered with the Securities and Exchange Board of India (Sebi). Experts said the small ones have not kept pace with technological change. Also, that recent regulatory changes have favoured the larger ones. ...Read Full Story

Sebi may propose removal of shareholding cap for setting up new bourses

The Securities and Exchange Board of India (Sebi) is considering liberalising rules for starting stock exchanges and depositories. According to sources, the market regulator is likely to propose removal of the shareholding cap for setting up stock exchanges and other market infrastructure intermediaries such as depositories.

At present, other stock exchanges, depositories and banks are permitted to hold up to 15 per cent of the share capital in stock exchanges and depositories. Other investors are only allowed to hold up to 5 per cent. Sebi is now looking at flexibility in these ...Read Full Story

IBC delisting norms: Small shareholders ask Sebi for review

Minority shareholders are miffed at the lenient delisting process for companies facing insolvency proceedings under the Insolvency and Bankruptcy Code (IBC). According to sources, several investor protection bodies have written to the Securities and Exchange Board of India (Sebi) for a review of the norms, which they say are anti-minority shareholders.

The special delisting norms for companies under the IBC, released earlier this week, offer a raw deal to minority shareholders who will be forced to tender their shares virtually free. As per the new rules, a company under the ...Read Full Story

Sebi mulling lower limit of Rs 100 mn m-cap for firms to stay listed

STOCK MARKET - The Securities and Exchanges Board of India may be planning to impose a minimum market capitalisation (m-cap) requirement of Rs 100 million for companies to stay listed, Livemint reported, citing sources. The move is said to be aimed at removing penny stocks from the markets.
Penny stocks are generally valued under Rs 10. These stocks are said to be highly risky because of their low liquidity. Their market capitalisation is usually very less.
In the past, the market regulator and income tax department have unearthed huge scams that were carried out using penny stocks. 11,000 cases of penny stock abuse came under the Sebi's radar in May last year. The entities had allegedly misused capital gains provisions to evade Rs 34,000 crore in taxes to the income tax (I-T) department, as reported earlier by the Business Standard.
Many international stock exchanges have a similar requirement.

For instance, a company needs to maintain a free-float market capitalisation of a minimum of $50 million over a 30-day period in order to remain listed.
Free-float market capitalization takes into consideration only those shares issued by the company that is readily available for trading in the market. It generally excludes promoters’ holding, government holding, strategic holding and other locked-in shares. A high free-float ensures better liquidity and may attract higher institutional participation.
However, the move might be questioned given that India lags major markets in free-float m-cap, as reported earlier by Business Standard. This is usually due to large promoter holdings in companies.
The Livemint report further stated that the Sebi might be planning to issue a consultation paper on this proposal.

Universal trading licences: Equity exchanges have advantage over commexes

STOCK MARKET - After allowing universal broking licences, the Securities and Exchange Board of India (Sebi) has now allowed setting up of universal exchanges – this means stock exchanges can now enter the commodity turf and commexes can also do stock exchange business like dealing in equity and forex. The market regulator has given exchanges three quarters to prepare for facing competition. However, there does not seem to be a level playing field – commodity exchanges are perhaps on a weaker wicket.

An industry official says: “MCX has better scope to first enter forex derivatives, as forex has a natural extension for commodities. NCDEX will now discuss the possibilities.” On the other hand, BSE and NSE are preparing to launch non-agri derivatives. NCDEX seems less worried as agri is its strong point where other exchanges will not rush to enter.

Several market intermediaries, industry officials and observers suggest that commodity exchanges appear weak, despite their dominance in their respective fields. The reason: Equity markets have evolved over time and have time-tested infrastructure, participants and products, so they have much more diversified revenue streams. But commodity exchanges, among many drawbacks, do not have enough products, they need to further develop market, and they do not have co-location or institutional investors.

The strength of commodity exchanges, especially MCX, is that they have vibrant energy and metals segments, where contracts are cash-settled and prices are derived from global exchanges like the London Metal Exchange for metals and the CME for energy contracts. Since these exchanges are leaders in their respective segments, equity exchanges will find it difficult to get global reference prices for settling their contracts. Sebi has, however, told exchanges to improve physical delivery and “only cash-settled contracts are less preferred by the regulator”, said a source. MCX will also work hard to retain this tie-up before any exchange takes it away.

Sebi's one-scheme-per-category rule is harsh: Morningstar's Anthony Serhan

Market regulator Securities and Exchange Board of India (Sebi) has said a mutual fund house can have only one scheme per category. The move will impact many fund houses, particularly the larger ones operating as many as a dozen schemes in some categories. Anthony Serhan, managing director (research strategy), Morningstar Asia-Pacific, calls the new rule harsh. In an interview with Samie Modak, Australia-based Serhan, an expert on investment themes and trends, says the Indian mutual fund industry has a lot of potential to grow.

Edited excerpts:
Indian equity mutual funds are getting over $3 billion every month. Do you think that is sustainable?

The record inflows that are coming into equity mutual funds (MFs) are on an incredibly small base. I still think there is more potential to grow. This is a secular change of moving away from gold and property to financial assets. That’s just part of any developing economy: As the rates of urbanisation and modernisation increase, you will see more money going into financial assets. Most Indian investors have not been anywhere near the equities market before. The first thing that you have to do is getting them to recognise equities as an investment. You can grow the number of people by educating them about returns, downturns and upturns. In Australia, the adult participation rate in equities is about 40 per cent; for India it is not even 10 per cent. In the next five years, the inflow number will be many time more. The industry is going to keep growing. If you look at the size of the Indian markets compared to other markets, it still doesn’t have the same economies of scale. Partly, this is because of the absolute size. Distribution-wise, the geographic spread of India is very wide.

Sebi orders forensic audit of 3 firms as clampdown on shell cos continues

Markets regulator Sebi has ordered forensic audit of three firms -- Trinity Tradelink, Info-Drive Software and Edynamics Solutions -- which figure among 331 suspected shell companies that are under its scanner.

These are in addition to Sebi ordering forensic of four other such firms -- IRIS Mediaworks, Hit Kit Global Solutions, Kavit Industries and GV Films.

In three separate orders dated September 13, Sebi has observed that prima facie Edynamics Solutions Ltd (ESL), Info-Drive Software Ltd (ISL) and Trinity Tradelink Ltd (TTL) were involved in misrepresentation of books of accounts.

In the interest of investors, it said, the regulator believes that financials of these companies should be independently audited to establish their genuineness.

Accordingly, Sebi has asked exchanges to appoint independent auditors to conduct forensic audit of these firms for verification, including their credentials/financials.

Besides, promoters and directors of the firms have been allowed only to buy securities of these companies. However, the shares held by them in these firms would not be allowed to be transferred for sale, by depositories.

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Sebi ban on shell companies: You should be seriously worried

STOCK MARKET - If you hold shares in any of the suspected shell companies that have been banned from trade following the Sebi order on Monday, you have a genuine reason to worry – at least for now.

On Monday, market regulator Sebi, directed the stock exchanges to ban trading in shares of 331 suspected shell companies and placed them under a graded surveillance measure (GSM) stage VI, where trading in the security is allowed only once a month with “surveillance deposit” of three times the trade value.

According to reports, mutual funds and investors collectively own shares worth nearly Rs 9,000 crore in these entities, with at least five companies commanding a market capitalisation (market-cap) of Rs 500 crore each. Some of the prominent ones among those banned include J Kumar Infraprojects, Parsvnath Developers, Prakash Industries, SQS India BFSI, Gallant Ispat, Adhunik Industries and Assam Company.

Though experts welcome the move to ban shell companies and protect investor wealth, they feel the order will prove to be particularly harsh on companies that eventually get a clean chit from the regulator post investigation.

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NSEL scam: Jignesh Shah denies violation of Sebi rules; alleges conspiracy

STOCK MARKET - Embattled businessman Jignesh Shah on Friday denied any violation of insider trading norms following Sebi order against 13 entities, including his relatives, with regard to trading in shares of MCX and erstwhile FTIL even as he alleged "conspiracy" against him.

On Wednesday, Sebi ordered impounding of "averted losses" worth over Rs 125 crore through alleged insider trading in MCX and its erstwhile promoter FTIL by 13 persons, including relatives of Shah and former top executives, with 'prior information' about the NSEL case.


Shah had served as Chairman and Managing Director of FTIL at the time when the alleged insider trading happened. However, no order has been passed against him directly.

Addressing the media here, Shah said people bought the shares in the companies in compliance with regulations and claimed that information about NSEL "was not unpublished".

Shah is the chairman emeritus of 63 Moons Technologies, formerly known as FTIL -- which was promoted by him.

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Sebi issues new bond regulations to reduce corporates' funding sources

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STOCK MARKET - The new regulations of Securities and Exchange Board of India (Sebi) on foreign holdings of rupee-denominated corporate bonds will reduce options for companies to diversify their funding sources, says a report.

Last week, the market regulator had said that foreign purchases of rupee-denominated corporate notes would only be permitted through auction once the foreign holdings reached 95 per cent of the cap.

"New, tighter regulations on foreign holdings of rupee-denominated corporate bonds and offshore issuance will reduce options for companies to diversify their funding sources, at least temporarily," Fitch Ratings said in a report.

The new norms will also prevent the use of certain complex transaction structures, which have recently gained popularity among corporate issuers, it said.

At present, the foreign portfolio investors can invest up to Rs 2,44,300 crore ($ 51 billion) in corporate bonds issued by domestic companies.

Foreign ownership is already above 95 per cent of the cap, which means these restrictions have come into effect, the report said.

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Sebi to auction 11 Sunshine Infra assets in Sept to recover illegal funds

STOCK MARKET - Markets regulator Sebi will auction as many as 11 properties owned by Sunshine Infrabuild Corporation in September to recover funds that it illegally raised from people.

The properties to go under the hammer include land parcels and shops in Delhi, Uttar Pradesh, Gujarat and Chhattisgarh, Securities and Exchange Board of India (Sebi) said in a public notice.

As part of the recovery proceedings, Sebi will auction the properties in Delhi, Uttar Pradesh, Gujarat on September 7, while assets in Chhattisgarh will go under the hammer on September 8.

The regulator has engaged SBI Capital Markets Ltd for assistance in the sale of the 11 properties.

The move comes after Sunshine Infrabuild failed to refund the money that it illegally raised from people.

The regulator has already attached the company's various bank accounts and mutual funds.

Sebi found that Sunshine Infrabuild allotted various types of debentures to over 8,000 investors and raised more than Rs 26 crore during 2010-11 to 2012-13. These funds were garnered in violation of the public issue norms.

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Sebi asks MCX Biz to return investors' money, imposes 10-year market ban

STOCK MARKET regulator Sebi has asked MCX Biz Solutions and its proprietor Syed Sadaq to return the money collected from investors after finding them guilty of duping investors through false documents.

Besides, they have been barred from the securities markets for 10 years.


Sebi said the company allegedly solicited money from investors promising huge returns while using fake and forged broker registration documents and a name similar to that of an exchange group.

The entity has no relation to the Multi Commodity Exchange (MCX).

The entities had also made representations and statements on their website about their activities in securities market in an "entirely untruthful manner".

They have allegedly raised more than Rs 35 lakh from investors through various schemes.

"...Noticees (MCX Biz and Sadaq) by their the act and omissions including false statements and representations in deceitful manner, have fraudulently solicited, enticed and induced investors to deal in securities," Sebi Whole Time Member S Raman said in an order dated July 20.

By indulging in such activities, they have violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practice) Regulations, he added.

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MCX partners with Thomson Reuters to launch co-branded commodity indices

STOCK MARKET - Multi Commodity Exchange of India (MCX) on Tuesday announced that it has joined hands with Thomson Reuters to launch co-branded commodity indices in India. The move follows signals from the Securities and Exchange Board of India (Sebi) to open up commodity markets.

While Sebi has already allowed trading in commodity option, it had long been deliberating allowing allowing trading in indices. This is because unlike equity indices, commodity indices are not directly useful for hedging in general but are used more for assets allocation.

According to sources, once MCX is ready with the first set of new indices, prepared using more scientific methods, existing indices for metals, agri-products and other commodities are likely to be phased out.

Sources close to the development said, "In the first phase, MCX proposes to have around 5-6 Indices -- a few product-based Indices, a few single-commodity ones and a composite index. The exchange is trying to be ready for dissemination by September 2017."

Once index trading is permitted, Sebi is expected to look at allowing commodity-specific exchange traded funds (ETFs) similar to gold ETFs and portfolio management services (PMS). These were banned a few years ago when the Forward Markets Commission (FMC) was regulating commodity derivatives.

A commodity broking industry veteran said that they had recently met Sebi officials and proposed to allow PMS in commodities, as now the market is under a strong and powerful regulator.

Sebi has also allowed category-3 alternative investment funds or hedge funds in commodity derivatives, and has moved to integrate businesses of commodity broking and share broking, which means that all businesses can be transacted under single entity, allowing fungibility of capital and clients' margins.

Airtel, Telenor file joint application for merger approval before NCLT

Bharti Airtel and Telenor India today filed a joint application before National Company Law Tribunal for approval of their merger following nod from the market regulator SEBI and stock exchanges -- BSE and NSE.

"Telenor India and Airtel have today filed the joint company application before the New Delhi Bench of the National Company Law Tribunal for approval of the proposed Scheme of merger. The merger is inter alia subject to other statutory approvals including from the Competition Commission of India," Bharti Airtel said in a statement.

The company said that it has received the approval of the Securities and Exchange Board of India (SEBI), BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) for the proposed scheme of merger.

Airtel and Telenor signed the agreement for merger on February 2017 under which Airtel will acquire Telenor India's running operations in seven circles -- Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam.

"These circles represent a high population concentration and therefore, offer a high potential for growth. The proposed acquisition will include transfer of all of Telenor India's assets and customers, further augmenting Airtel's overall customer base and network," the statement said.

It will also enable Airtel to further bolster its strong spectrum footprint in these seven circles, with the addition of 43.4 MHz spectrum in the 1800 MHz band -- widely known as 2G spectrum but it is now being used for 4G services as well.
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Enough is enough: SC orders sale of Sahara's Rs 34,000 crore Aamby Valley

BREAKING NEWS - The Supreme Court today asked Bombay High Court's official liquidator to sell the Rs 34,000 crore worth of properties of the Aamby Valley owned by the Sahara Group and directed its chief Subrata Roy to personally appear before it on April 28.

"Enough is enough. You cannot say something today and resile tomorrow," a bench, comprising Justices Dipak Misra, Ranjan Gogoi and A K Sikri, said, taking strong note of non- submission of over Rs 5,000 crore by the Sahara group.

The bench also cautioned Roy from playing with the court's order and said non-compliance of its order would invite the wrath of the law and ultimately he will be at his own peril.

The bench asked the official liquidator, attached with the Bombay High Court, to auction the Aamby Valley properties, estimated to be worth Rs 34,000 crore, and directly report to it.

The bench also directed Roy and his group as well as SEBI to provide all necessary details relating to the properties to the official liquidator within 48 hours.

Meanwhile, the top court restrained one Prakash Swamy, who has filed an affidavit with regard to the sale of Sahara hotels in the USA, from leaving India and asked him to deposit Rs 10 crore as fine with the market regulator SEBI.

Swamy will also have to appear in person in the apex court on April 28.

The Supreme Court had on April 6 warned the Sahara Group that if it failed to deposit Rs 5092.6 crore in SEBI-Sahara refund account by April 17 in pursuance of its order, it will be "compelled" to auction its property at the Aamby Valley in Pune.

The top court had told the group that no extension of time would be granted for depositing the amount.

The observation had come when the lawyer mentioned an interim plea seeking extension of time for depositing the money in the SEBI-Sahara refund account.

The court had also observed that it had clearly told the group that a "substantial amount" must come in the refund account.
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