Coming down heavily on entities using stock markets for evading taxes and laundering black money, Capital market watchdog, Stock Exchange Board of India (SEBI) has decided to suspend trading in listed companies that are found to be used by such manipulators.
While, SEBI has identified three parameters for taking action against such companies, it has decided to suspend the trading activities of those companies, which are found to be violating more than one parameters identified by it. The parameters include, companies being non-existent on their mentioned address, misuse of preferential allotment and weak fundamentals not supporting price rise.
It has been reported that both the ‘bull’ and the ‘bear’ cartel have been estimated to be assisting over 1,000 entities, including individuals, listed companies and their promoters and top executives -- in tax evasion and money laundering. While, bear cartel acts in concert to push down the share prices to show losses that are eventually used to counterbalance tax demand of the customer from his or her other income, bull cartel is utilized for sharp rise in share prices to make undue gains in stocks of little-known companies to launder black money through stocks and show the same as legitimate gains.
Notably, while a large number of small NBFCs and brokers are already under SEBI's scanner for having facilitated illicit transactions worth thousands of crore of rupees over the past 2-3 years, market watchdog has noticed incremental growth of such illicit activities in the recent years.