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Strict vigil on illegal trade

Bangalore, Aug. 16 (PTI): Securities and Exchange Board of India chairman G. . Bajpai today said all the state governments had activated the “state machinery” to clamp down on illegal activities in stocks and securities outside the regional stock exchanges.

“I have received confirmation from all the chief ministers that they have activated the state machinery to watch out for illegal activities in any part of the state with reference to securities,” Bajpai said today.

Bajpai, in a letter to the chief ministers, had urged them to crack down on the bad elements outside the stock exchanges who had depressed market sentiment and had the potential of hurting retail investors.

Maintaining that Sebi could crack its whip only on those individuals and entities it regulated, Bajpai said “I can’t do it on a street person.”

Though declining to identify places where illegal activity was dormant, he said “in some places the involvement is large”.

Earlier, addressing an investors’ meet, Bajpai warned them against “shell” companies and said people should invest in firms which had value in it.

“If you feel that a company does not have value in it, refrain from investing your hard earned money,” he said.

Asserting that Sebi was watching every moment of the market, Bajpai urged that even the investors should be watchful of irregular or illegal activities in the market and just not depend on the single regulator.

He said investors should be wary of hype created by market forces, some of them who create rumours and inflate stock prices.

“...Rumours are spread by certain vested interests, in case they are not verified...They take undue advantage at the cost of a gullible investors,” Bajpai said, calling on investors to do their “homework” before investing in the securities market.

He said Sebi had cracked down on 561 cases last year, more than what it did since its existence, he said and added that in 361 cases punitive action was taken. Bajpai said Indian markets in some cases were more mature than the developed markets in settlement cycles, operations, systematic and structural risks.

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